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FAll 2017 The Official Magazine of the MicroCap Stock Market Since 2006

SRAX NASDAQ CM: SRAX AzurRx BioPharma, Inc. NASDAQ CM: AZRX

14 30
Page Christopher Miglino , Co-Founder, CEO Page Thijs Spoor, CEO
www.srax.com www.azurrx.com

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RIWI Corp. CSE: RIW, OTC MARKETS: RWCRF MariMed, Inc. OTC MARKETS: MRMD

28 8
Neil L. Seeman BA, J.D, MPH, Founder & CEO Page Facebook Robert N. Fireman, Esq., CEO
Page MySpace StumbleUpon Digg
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FEATURED ARTICLES Slash Dot Mixx Skype Technorati

12 MicroCaps Trending Higher Into End of Trend 40 A Massive $Trillion Industry is Born 75 Impact of Trump Administration on the
Steven M. Shelton, MS, MBA, CFP, CLU, CHFC, TEP, CIMA, CMT Dr. John L. Faessel Oil Price Frederic Scheer
34 Cannabis Investing What Looks Interesting 52 What BioPharma Investors Need to Know 78 Uranium
Reddit
Exploration and Mining Public
FriendFeed YouTube LinkedIn
Dr. Lauren Chung About Financial Disclosure Companies Mike Alkin
Robert E. Fiorentino, CPA
36 The Art of Value Investing 86 Will the Private Public Joint Venture
Sanjay Bakshi & Robert Kraft 56 Junior Resource Market: PPJV Reinvent the PIPE Market?
2017 Mid-Year Review Rick Rule Karl Douglas
Newsvine SlideShare Google Google Talk
39 Partnering with a Transfer Agent
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Steven Nelson 66 Man Versus Machine? No! Man Plus 91 Crowdfunding on the Verge of Mainstream
Machine! Len Haussler, CFA Alon Goren
 NASDAQ CM: FNJN
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20 Years at the
Center of
Cybersecurity

Finjan Technology &

Patent Licensing

Software & Malicious M86/ Innovation NASDAQ: Finjan Cyberisk

Hardware Code Trustwave Fund FNJN Mobile Advisory
Research Merger (JVP) Services
Center

www.finjan.com investors@finjan.com
 O nce the DJIA blasted through 22,000,
the market went from bullish to new
daily records. As billions in reported profits
E D I T O R I A L
Reign Sapphire Corporation, a direct-to-con-
In Loving Memory of Our Precious Daughter, continue to pour into the coffers of US and sumer, branded and custom jewelry company,
and Sister, Sammi Kane Kraft
Canadian public companies, a stock market Clean Teq Holdings Limited, a multi-faceted
Published Since 2006 euphoria has overtaken us, which is a good technology and resource company, Eskay
thing for investors, shareholders and for many Mining Corp., a natural resource, acquisition
www.stocknewsnow.com MicroCap companies. Heres why: increasing and exploration company, GoviEx Uranium
Follow us: @StockNewsNow revenue and corporate earnings are providing Company, an exploration and development
new cash and equity capital which companies of uranium company, Emerald Health
SNN Inc.
5839 Green Valley Circle can deploy in several ways such as: paying out Therapeutics, Inc., produces and sells medical
Suite 205 or increasing dividends, debt reduction, new marijuana and cannabis oils in Canada, and
Culver City, Ca. 90230 hires & expansion, repurchasing shares in the American Gene Technologies International
www.StockNewsNow.com
open market, capital expenditures for new Inc., a private company, that is developing
PUBLISHER facilities, or to purchase target microcap com- lentivirus therapies for the treatment of can-
Shelly Kraft panies. Many microcap target companies are cer and other chronic human diseases.
SNN Chairman/Founder/CEO
undervalued and ripe for the picking by those This issue includes thought leader opin-
skraft@snnwire.com
seeking to expand their businesses through ions and columns from Len Haussler, Opus
Lynda Lou Lulu Kraft partial or complete acquisitions. Capital Management, Lou Bevilacqua, Esq.,
SNN President
The next phase of this incredible bull mar- Bevilacqua PLLC, Brady Fletcher, TSX Venture
EXECUTIVE EDITOR ket could be most beneficial to companies Exchange, Jason Paltrowitz, OTC Markets,
Robert Kane Kraft we all follow, the microcaps, which are usu- Frederick Sheer, L6 Chemicals & Logistics,
SNN Chief Operating Officer
ally the last group to be bought in bull mar- Corp., John Lowy, Esq., Olympic Capital, Mark
rkraft@snnwire.com
kets and the first to get sold in bear markets. Shore, MBA, Shore Capital Research LLC, Rick
Wesley Ramjeet Many microcap companies are currently Rule, Sprott Global Resource Investments Ltd.,
SNN Chief Financial Officer
raising new capital or looking for corporate Miguel Colon, Transfer.ly, Steven M. Shelton,
info@snnwire.com
synergies as this magazine issue publishes. Cornerstone Global Group, Steven Nelson,
ASIAN PACIFIC CORRESPONDENT This issue highlights 16 profiled compa- Esq. Continental Stock Transfer and Trust
Leslie Richardson
nies including: On the front cover: MariMed, Company, Rob Fiorentino, CPA, Friedman
SNN COMPLIANCE AND DUE DILIGENCE Inc., our first Cannabis industry front cover LLP., Adam Selkin, SLee 3 Consulting, Karl
ADMINISTRATION company, RIWI Corp., a digital intelligence Douglas, PPMT Group, Alon Goren, Crowd
Jack Leslie
provider technology company, SRAX, an Invest Summit, Lauren Chung, WestPark
CHAIRMAN OF SNN ADVISORY BOARD Internet advertising and platform technol- Capital, and an excerpt from Robert Krafts
Dr. Leonard Makowka ogy company and AzurRx BioPharma, Inc., podcast interview with Sanjay Bakshi.
a clinical development stage biopharmaceu- MicroCap Review welcomes two first time
ADVERTISING and SALES
info@snnwire.com tical company. columnists: Life Insurance Corner by Chris
424-227-9018 On the inside front cover is Finjan Holdings, Orestis, GWG Holdings, Inc., a financial ser-
Inc., a cybersecurity technology company, the vices company that purchases life insurance
GRAPHIC PRODUCTION
Unitron Media Corp centerfold is Teranga Gold Corp., an explora- policies in the secondary market in the US,
info@unitronmedia.com tion, development and production and sale and Real Estate Corner by Perry Vieth of
of gold company, and the back inside cover Ceres Farms LLC. We also welcome back Dr.
SNN CONFERENCES
info@snnwire.com is Lucara Diamond Corp., an exploration, John L. Faessel of ON THE MARKET reports.
424-227-9018 development and diamond mining company. Thank you to this issues contributors and
Here are the remaining profiled companies: to our loyal magazine subscribers, readers,
BNK Petroleum Inc., an acquisition, explora- followers and to all our friends & supporters
tion and production of unconventional oil in the microcap community.
and gas resource company, INVO Bioscience,
Micro-Cap Review Magazine is published periodically. POSTMASTER send Inc., a medical device company, PharmaCyte Shelly Kraft, Publisher n
address Changes to Micro-Cap Review Corporate Oces. Copyright 2017
by Micro-Cap Review Inc. All Rights Reserved. Reproduction without per- Biotech, Inc., a clinical stage biotech company,
mission of the Publisher is prohibited. The publishers and editors are Not
responsible for unsolicited materials. Every eort has been made to assure This publication and its contents are not to be construed, under any circumstances, as an offer to sell or a solicitation to buy or effect transactions in any securities. No investment advice is provided or should be construed to be provided herein. MicroCap Review Magazine and its owners, employees and
affiliates are not, nor do any of them claim to be, registered broker-dealers or registered investment advisors. This publication may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of
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 CONTENTS
STOCKNEWSNOW.COM

F E AT U R E D A RT I C L E S
FALL 2017

12 MicroCaps Trending Higher Into End of Trend! 66 Man Versus Machine? No! Man Plus Machine!
By Steven M. Shelton, MS, MBA, CFP, CLU, CHFC, By Len Haussler, CFA
TEP, CIMA, CMT
72 5 Takeaways from Our Small-Cap IR Summit
34 Cannabis Investing What Looks Interesting By Jason Paltrowitz
By Dr. Lauren Chung
75 Impact of the Trump Administration on the Price
36 The Art of Value Investing By Robert Bobby Kraft of Oil By Frederic Scheer

40 A Massive $Trillion Industry is Born 82 Reg A+ Status Report: A+ or B- ?

By Dr. John L. Faessel By Miguel Colon, MBA

56 Junior Resource Market: 2017 Mid-Year Review 86 Will the Private Public Joint Venture PPJV
By Rick Rule Reinvent the PIPE Market?
By Karl B. Douglas
58 The Current Status of the Reverse Merger Market
By John Lowy, Esq. 91 Crowdfunding on the Verge of Mainstream
By Alon Goren
59 Why List on TSX Venture Exchange?
Q&A with Brady Fletcher

Proled Companies
8 MariMed, Inc.
OTC MARKETS: MRMD
14 SRAX
NASDAQ CM: SRAX
18 Lucara Diamond Corp.
TSX, BSE, OMX: LUC,
OTC MARKETS: LUCRF
24 Emerald Health Therapeutics, Inc.
TSX-V: EMH, OTC MARKETS:
EMHTF
26 INVO Bioscience, Inc. 44 Finjan Holdings, Inc. 55 American Gene Technologies
OTC MARKETS: IVOB NASDAQ CM: FNJN International
27 PharmaCyte Biotech, Inc. 48 Teranga Gold Corporation Private Company
OTC MARKETS: PMCB TSX: TGZ, 76 BNK Petroleum, Inc.
28 RIWI Corp. OTC MARKETS: TGCDF TSX: BKX, OTC MARKETS: BNKPF
CSE: RIW & OTC MARKETS: RWCRF 50 Eskay Mining Corp. 79 GoviEx Uranium Inc.
30 AzurRx BioPharma, Inc. TSX-V: ESK, TSX-V: GXU, OTC MARKETS:
NASDAQ CM: AZRX OTC MARKETS: ESKYF GVXXF
42 Clean TeQ Holdings Limited 84 Reign Sapphire Corp.
OTC MARKETS: CTEQF, ASX: CLQ OTC MARKETS: RGNP

Real Estate Corner Life Sciences Corner Opinion

17 Gold with a Coupon 52 What BioPharma Investors 78 Uranium Exploration and Mining
By Perry Vieth Need to Know About Financial Public Companies
Disclosure By Mike Alkin
Opinion By Robert E. Fiorentino, CPA
22 Cannabis Q&A with Adam Selkin Life Insurance Corner
By Shelly Kraft Commodities Corner 80 NAIC Sees Life Insurance
60 VSTOXX / VIX Volatility Spread as a Viable Solution to Long-
Accounting Corner Behavior During Recent Term Care Costs
23 New Financial Reporting Rules By Chris Orestis
Volatility Events
Will Simplify Accounting On By Mark Shore, MBA
Some Transactions Comic Strip
By Corey Fischer, CPA Asia Corner 90 WallStreet Chicken - Episode 16
64 Hong Kong Equity Market IPO: They Cant All Be Winners?
Cannabis Corner Robust 20 Years After Handover
32 The Global Proliferation of By Leslie Richardson 94 New Formations
Medical Cannabis By David Alsup
By Alan Brochstein Legal Corner
69 What is an ICO?
Opinion By Louis A. Bevilacqua, Esq.
39 Partnering with a Transfer Agent
By Steven Nelson

www.stocknewsnow.com MicroCap Review Magazine 7

 P R O F I L E D C O M PA N Y
MariMed well Positioned to
capture the rapid Growth of the
legal cannabis industry nationally
Massachusetts based Cannabis Management Company building a
National Footprint in Multiple States Across Country
W
hen eastern states ballot ref-
erendums were forcing states
to implement medical mari-
juana programs, Robert Fireman and Jon
Levine formed MariMed Advisors to capital-
ize on the opportunity. Their vision was to
bring professional management, standard
operating procedures, and Best Practices
to the hodge-podge cannabis industry.
They believed a more grounded eastern
approach would be a foundation for a suc-
cessful company that could compete with
the cannabis companies coming from the
wild-west.
MariMed believes cannabis may be one
of the most important medicinal plants on
earth and has the power to transform human
health and wellness. Our business practice
is to preserve cannabis valuable essence
and future promise through strict opera-
tional management of the entire legal seed-
2-consumer experience, explained Robert
Fireman, MariMeds CEO.
The Managed Services practice of
MariMed includes multi-dimensional
advisory services from real estate location
selection through full business operations
including; licensing, compliance, security,
systems integration, day-to-day operations,
technology, and human capital. Secondly,
the company offers real estate and equip-
Robert N. Fireman, Esq., CEO
ment investment capital to fast-track canna-
8 MicroCap Review Magazine
otc MArkets: MrMd
bis cultivation, production, and distribution.
Lastly, the companys licensed and branded
products under the name Kalm Fusion, as
well as retail design experiences providing a
full range of expertise.
The legal cannabis market is poised to
grow beyond $21.8 billion by 2020, at a
CAGR of 25%. *(New Frontier). 29 states
have some form of legalized cannabis; 16
states have laws that allow for CBD use; and 7
states have fully legalized cannabis for adults.
The public markets are supporting cannabis
companies in both the United States and
Canada. Cannabis programs are now begin-
ning in countries such as Germany, France,
Netherlands, Israel, Australia, Uruguay,
Columbia and more.
ProFessionAl exPerienced
MAnAGeMent teAM
While industry insiders see a continued
skyrocketing pace for expanding the medical
cannabis market, its worth watching where
leaders have emerged to get a good sense of
what is to come. * (New Frontier)
The key to capturing a meaningful share
of the growing legal cannabis market will
fall to skilled executive management teams
with a proven and diverse cross-section of
business disciplines that provide meaning-
ful accountability and operational expertise.
MariMeds team consists of senior execu-
tives in law, finance, real estate, agriculture,
www.stocknewsnow.com

Thrive Anna Dispensary, Illinois
security, management, product develop-
ment, sales, marketing, and merchandising.
Several members of the team provide vast
experience in cannabis and the universal
subculture that is still at the roots of this
movement.
Robert Fireman, MariMeds CEO, entrepre-
neur and attorney envisions the MariMed plat-
form as a total solution for the development
and operation of state regulated, compliant
cannabis facilities. Jon Levine, Marimed CFO
manages all financial operations including;
contracts, license compliance and security,
human resources, capital, banking, real estate
services, and MariMeds public reporting.
Timothy Shaw, Marimed COO is the logistics
guru across all operating systems and partner-
ships, integrated cultivation efficiencys, safety,
production systems, product development,
vendor management, product satisfaction, and
operating compliances.
Best Practices to Design, Develop, and
Operate Cannabis Facilities.
In 2012, the medical cannabis industry was
still fighting the widespread fog of stoner cul-
ture and stigma. To combat this perception,
the team utilized tried and true business expe-
rience and practices creating strict protocols,
extensive training, and efficient operations.
We made smart decisions early and continue
to execute our vision, stated Robert Fireman
MariMeds CEO.
www.stocknewsnow.com
The MariMed team developed the Thomas
C. Slater Compassion Center in Providence
Rhode Island in 2012. It is viewed as a model
of excellence for other cannabis facilities
throughout the country. Following a defined
business plan this 50,000 sq. ft seed-to-sale
facility presently services over 17,000 medi-
cal cannabis patients. Following MariMeds
playbook, its processes, procedures, and pro-
tocols are replicable and scalable. MariMed
adheres to strict disciplines and processes
considered proprietary for how it manages
cultivation and production at its clients state
regulated facilities. Managing the yield and
operations of large commercial cultivation
facilities takes an extraordinary amount of
agriculture business operations experience,
stated Timothy Shaw Marimeds COO.
MariMed has been most successful writing
winning applications and developing success-
ful cannabis businesses for its clients. Examples
include;
2015: The First State Compassion
Center, another 50,000 sq. ft. seed-to-
sale facility in Wilmington
2016: Opened Thrive Anna Dispensary
in Illinois
2016: Opened Thrive Harrisburg
Dispensary in Illinois
2016: Awarded Massachusetts
Provision Medical license for ARL
Healthcare for cultivation, production
and three dispensaries
2016: Awarded Maryland Provisional
Medical License for Kind Therapeutics
USA for cultivation, production, and
dispensary
2017: Under MariMeds management
First State was awarded its second
license and has recently opened a dis-
pensary in Lewes, DE
We have succeeded where many others
have failed, said Jon Levine CFO. Winning a
license and then obtaining all the subsequent
needed approvals -- establishing financial
order, and maintaining a compliant organiza-
tion are essential for a legal cannabis operators
success.
At the Forefront of
Medical Research
MariMed, is committed to developing prod-
ucts steeped in the latest medical research
and clinical studies, and is always looking
to produce and deliver safe cannabis to the
thousands of patients with debilitation ill-
nesses. MariMed team members support
efforts to provide CBD medicine to parents
of epileptic children under the care of their
pediatric doctors. MariMed also supports
implementation of state sponsored cannabis
trials that may positively affect veterans with
PTSD, patients suffering from pain, MS,
Parkinsons and other diseases.
MariMeds philosophy is to provide the
highest quality products, service, and exper-
tise that insure the integrity of a pesticide
free and organic cannabis product that is
reliable, predictable, and dosage specific, said
Timothy Shaw, MariMeds COO. Developing
the infrastructure required to deliver consis-
tency for legal cannabis medical products is
something the company takes seriously and
where MariMed leads.
MariMed has a strategic agreement with
Tikun Olam, USA, to market Tikuns pro-
prietary genetic cannabis strains, backed
byover 10 years of clinical trials and research
from Israel for expansion into multiple legal
cannabis states. We believe Tikum Olams
MicroCap Review Magazine 9

Innovative, all-natural Kalm Fusion products
clinical trial data, patients, and proprietary
genetic cannabis strains provide MariMed
with the most advantageous product offering
with proven efficacy the market has to offer
said Robert Fireman CEO.
kAlM FusionAll-nAturAl
ForMulAtions driVe
Growth
Launched in 2016, Kalm Fusion was created
to provide patients with an all-natural line
of cannabis products. With zero artificial or
synthetic ingredients, Kalm Fusion provides
an array of easy-to-carry, low dose products
in both THC and CBD formulations. These
include; Mari-Melts sublingual strips, Mari-
Mints, Kalm-Corn a microwave popcorn, and
Kalm FIZZion effervescent tablets.
The Company has an aggressive research
and development program to expand the
Kalm Fusion brand. One exciting new prod-
uct under development utilizes a patented
trans-dermal technology allowing THC
or CBD actives to be transmitted directly
through the skin.
Since cannabis cannot be transported over
state line, MariMed is forming strategic rela-
tionships on a state-by-state basis, with licensed
companies that are trained to follow MariMeds
protocols and practices to manufacture and
distribute Kalm Fusion Products. These states
10 MicroCap Review Magazine
include California, Illinois, Nevada, Oregon,
Washington, Massachusetts, Arizona, and
Maryland. The Company expects to have
distribution access for Kalm Fusion products
in over 5000 dispensaries.
the work And business
Model Are showinG results
Over the last five years, MariMed has qui-
etly won state marijuana licenses in Rhode
Island, Delaware, Massachusetts, Illinois,
Nevada, and Maryland.
The Company enjoyed revenue growth of
180% year-over-year reaching $3.5 million
during 2015 and 2016. Real estate revenue
and management fees increased from $1.270M
to $3.564M during this term. Revenues for the
six months ended June 30, 2017 more than
doubled from the same period in 2016 , from
$1,261,896to $2,771,776.. This significant
increase was primarily due to MariMeds
medical cannabis clients posting a strong
89% increase in revenues.,
MariMed expects its revenue to continue
to increase this year from its existing facili-
ties in addition to the opening of its Nevada
cultivation center. New revenue will be gen-
erated from the expansion of Kalm Fusion
product licensing as the Company looks to
adding more states to its program. MariMed
anticipates opening the Maryland and
Massachusetts businesses in 2018, which will
likely have a significant positive impact on
MariMeds revenue and profit.
In June 2017, the company completed a
capital raise of $5,150,000. These funds
were used to fund the construction of a
second dispensary in Delaware, the comple-
tion of the cultivation facility in Nevada, and
the ongoing development of new integrated
medical cannabis facilities in Maryland.
MariMed is in the process of filing an S1
Registration to continue to raise capital to
support its continued growth. These new
funds will be used to acquire real estate for
developing additional cannabis facilities in
both Maryland and Massachusetts along
with strategic marketing programs across the
entire MariMed ecosystem. With expected
higher revenue, and profit, plus hard real
estate assets the company goal is to be up-list
to NASDAQ by 2019.
For more information:
www.marimedadvisors.com
info@marimedadvisors.com
Stock Ticker: MRMD 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
4242279018 11
 F E AT U R E D A R T I C L E
MicroCaps Trending Higher Into End of Trend!
CORNERSTONE GLOBAL
GROUP T-REPORT
in brieF
Major Takeaways
Russell Microcap Index has recently
broken out of a six month near side-
ways consolidation, made a new all-
time high and remains in a confirmed
uptrend but is subject to corrections,
as it moves on its own time table
toward an anticipated historic crest
Select technical indicators, stock mar-
ket cycles and Elliott Wave analysis
are suggesting a short term top in
July/early August 2017, followed
by a decline into September/early
October and a major top later in
October/November 2017
There is always that possibility of new
monetary or fiscal manipulation that
could postpone the top until no later
than mid-2018 but the market will
have its way in due season remem-
ber, the global markets are bigger and
more powerful than any central bank
or government
Given this is a USA 250 year equity
cycle topping process, more spe-
cific time line and Index objective
updates will be forthcoming as mar-
ket action becomes more definitive
As anticipated in the DJIA, S&P 500
n BY STEVEN M. SHELTON,
MS, MBA, CFP, CLU, CHFC, TEP,
CIMA, CMT
12 MicroCap Review Magazine
and NASDAQ, a major Microcap
crest will probably result in a high
volatility ratcheting downward
trend leading to a long term bottom,
with a probable low in 2020 or so
Until more definitive index market
action takes place that allows for call-
ing a high probability end of the 2009
bull trend and a lasting crest, a move
under the February 2016 low will
confirm the long term trend to down;
until then the trend is up
To well establish these takeaways, this
Cornerstone Global Group (CGG) Technical
Report will comment on the economic and
general market outlook as well as the
Russell Microcap Index weekly chart and
conclusion:
econoMic And MArket
coMMentAry
From a long term historical perspective,
most USA equity markets continue to reflect
a LONG TERM topping process of a 250
year cycle:
The new historic highs in microcaps,
small caps and large caps reflect his-
toric exuberance of extreme opti-
mism, resulting in extreme compla-
cency among market participants,
thus greed is perceived as eternally
profitable, while risk/fear is and shall
remain nonexistent!
This collective investor attitude or
mood is due in part to historic low
rates, brought on by an accommo-
dating central bank and lenders in
general, exasperated by few invest-
ment alternatives, all of which are
fueling fiscal irresponsibility, lead-
ing to a rising USA national debt of
$19,848,342,893,093 as of 13 July 17
as well as financial crises regarding
states, cities, pensions, student loans,
car loans, individual debt, and more, a
reflection of extreme optimism among
bankers, thus greed is perceived as
eternally profitable, while risk/fear is
and shall remain nonexistent!
Extreme and historic optimism is
typically evidenced in markets that
are perceived to be trending to the
moon, only to find out that markets
really do not grow nor trend to the
moon financial gravity pulls them
back to reality!
Indeed in recorded history, there has
been an upward bias in USA equity
markets but they have always been
punctuated by minor and major
resets in excessive optimism and atti-
tude that ultimately leads to finan-
cially destructive behavior in govern-
ments, companies and households,
ultimately resulting in a painful reset
The good news is the cyclical reoc-
curring resets reduces excess debt
and capacity, which brings forth
a new spring season of economic
renewal as well as a new secular
equity bull market, along with slow-
ly rising rates and inflation
AnAlysis And coMMents:
The above weekly Index chart clearly
indicates Index is above both its 200
week and 50 week Simple Moving
Averages, thus the trend is up
Anticipating a short term top in July
early August; such a top may be
imminent if Index does not make new
highs while the DJIA and S&P 500 are
BTW, that is happening today, 14 July
2017 but one day does not denote a
change in trend
Beware that a very reliable technical
www.stocknewsnow.com
Weekly Russell Microcap Index chart
indicator, Relative Strength Indicator
(RSI), is exhibiting bearish negative
divergence in both the daily, weekly
and monthly charts
When such is noted on a daily chart,
a decline of some magnitude is in the
making sooner than later
When such is noted on a month-
ly chart, it is indicative of a major
decline but given its monthly, the
decline can be months out
In essence, all indications are that
the microcap index is headed for an
eventual major top and substantial
decline, which suggests vigilance as
to timing of a trend change
NOTE: the Russell 2000 small cap
index has much more market his-
tory and such history has noted that
after each market rise from 1998 to
2000 and 2002 to 2007, the index has
returned to its origin; that would sug-
gest a potential decline of the Russell
Microcap Index to around 130-150
for a major low
Lastly, historically market crashes
tend not occur at the top of the mar-
ket but come later in an already estab-
lished downtrend, just as the DJIA
and S&P 500 did in 1987, 2000, 2007
www.stocknewsnow.com
Conclusion
Historic tops are coming to USA
equity indices, to include the Russell
Microcap Index
The exact timing is always an
unknown but just as storm clouds
appear before a potential thunder-
storm, so will there will be technical
indicators that will alert those aware
and vigilant of a potential historic
top and decline
The great news is that such a top and
decline is a once in a lifetime oppor-
tunity to profit from such action as
well as to protect wealth for retire-
ment and the next generation! n
Steven Shelton is a Financial Services veteran of more
than 30 years, having served in senior management
in both the insurance and broker/dealer community,
on and off shore. He has expertise in economics,
financial market analysis, wealth management, tra-
ditional and alternative investments, financial plan-
ning, marketing, insurance, sales and consulting as
well as an international speaking regarding global
economics and financial markets. This is evidenced
by advanced degrees in business administration 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 finan-
cial services publishing entity and Managing Partner
of Shelton Farms and Enterprises LLC
DISCLAIMER:
Cornerstone Global Group LLC, 3240 North Lake
Shore Drive, Suite 11-D, Chicago Illinois 60657, pro-
vides institutional consultancy on financial services
marketing, distribution and product/service develop-
ment to and for institutional use only.
Cornerstone Global Group LLC is also the newslet-
ter publisher of the CGG Global Market Technical
Report, CGG Technical Research Notes and other
publications, all of which are informational services
and may include opinions as to buying, selling, hold-
ing various securities, asset allocation and strategies.
However, Cornerstone Global Group LLC, its own-
ers, employees and consultants are not investment
advisers. At no time may a reader, caller, viewer or
consultancy client be justified in inferring that any
advice is intended as investment advice or as invest-
ment 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 advi-
sor. Additionally, Cornerstone Global Group LLC
does not render tax, accounting or legal advice and
the information contained in this communication
should not be regarded as such. Information pro-
vided by Cornerstone Global Group is expressed in
good faith but is not guaranteed in any way.
MicroCap Review Magazine 13
 P R O F I L E D C O M PA N Y nAsdAQ cM: srAx

srAx
Providing the tools to automate digital marketers
and content owners campaigns across channels,
platforms and publishers.

E
ver since the Internet advertising
market began to surge, program-
matic and real-time bidding (RTB)
technologies have become the main drivers
of continued and exponential growth in
the sector. Yet over the past few years, the
marketing landscape has transformed in
ways that were previously unimaginable.
The ability to buy digital media instantly,
the stratospheric rise of social media, and
the power to analyze and use unprecedented
amounts of digital data have all contributed
to this seismic shift.
To succeed in this booming but com-
petitive landscape, companies must have
the perfect combination of technologies and
data strategies. Focused on delivering tools on the Nasdaq under the symbol SRAX.
that automate data-driven marketing cam- Following this achievement, the company
paigns, SRAX is an advertising technology further strengthened its leadership team with
company positioned to seize the massive the appointment of J.P. Hannan as CFO.
opportunities offered by the digital shift. Hannan has served public companies in a
CEO Christopher Miglino has been in financial capacity for more than 20 years,
the advertising technology landscape for most recently as Vice President, Treasurer
decades. In March 2010, he co-founded and CFO of Cumulus Media, Inc., the sec-
SRAX (then Social Reality, Inc.) with a vision ond-largest radio station operator in the U.S.
to monetize the growing social media adver- First the company drove significant rev-
tising market for both app developers and enue growth, increasing from $5 million in
Fortune 500 brands. 2013 to $15 million in 2014, $30 million in
Since then, Miglino has moved the com- 2015 and $36 million in 2016. In 2017, man-
pany forward, thanks in large part to his abil- agement has realigned the sales team to focus
ity to assess and capture the rapidly growing, on high margin revenue, which improved
fragmented RTB and social media market. margin from 32 percent for 2016 to 56 per-
Christopher Miglino, Co-Founder, CEO
In October 2016, SRAX began trading cent for the second quarter of 2017.

14 MicroCap Review Magazine www.stocknewsnow.com

Solutions for a Growing
Multi-Vertical Market
With proprietary machine-learning software
that maximizes performance and profits for
brands and content owners, SRAX has a
solid footing in a market valued at approach-
ing $32 billion. In fact, programmatic digital
display ad spend is set to grow exponentially,
reaching 82 percent of total digital display ad
spend by 2018, according to eMarketer.
SRAX thrives in this environment by
engaging a diverse customer base developed
from both sides of the programmatic market:
marketers (buy-side) and content owners
(sell-side).
For brands, agencies and buy-side part-
ners, SRAX maximizes returns on digital
inventory across devices in real time. For
website and mobile application owners,
influencers and other sell-side partners,
SRAXs programmatic technology ampli-
fies content monetization and overall digital
marketing performance.
We designed our tools to improve perfor-
mance across all digital channels for brands
in any vertical, says Miglino. This solid foot-
hold with prominent agencies serving vari-
ous verticals healthcare, auto, consumer
goods and sports represents a significant
opportunity for the company in the digital
space since each could evolve into a stand-
alone business.
The companys vertical-forward strategy
is exemplified by the success of its SRAXmd
product. In August 2014, The SRAXmd
healthcare platform came to life to service a
market need for true advertising automation
This solid foothold with prominent agencies
serving various verticals healthcare, auto,
consumer goods and sports represents a significant
opportunity for the company in the digital space
since each could evolve into a standalone business.
www.stocknewsnow.com
and innovation within the digital healthcare
space.
SRAXmds core customers, pharmaceuti-
cal companies, didnt have many options to
choose from when it came to reaching their
intended audience on desktop and mobile
devices. The industry standard of reaching
doctors by buying ads in specific medical
journals or apps was limited in scale.
Recognizing the need to reach physicians
with a timely deployment of ads triggered by
an outside event (like a diagnosis, a potential
relapsing patient or a rejected insurance
claim, for example), SRAXs Co-founder and
CIO Erin DeRuggiero, developed a solution
that goes beyond what most advertising
agencies and tech companies are able to
deliver.
Our ability to deliver display and video
ad messages directly to a healthcare pro-
viders handheld device has been pivotal to
our success and continued growth. When
you service clients who manufacture first
and second-line cancer therapies, real-time
ad targeting at the point of care can impact
patient outcomes in a meaningful way, says
DeRuggiero.
Her conversations with pharma-brand
customers solidified that theres a big gap
between what they are trying to achieve
through digital and mobile ad targeting and
whats available in the marketplace. We
set out to close that gap with our health-
care IT products, DOCTRAX, DOCTRAX
MATCH, DOME and MOSEE, to meet
the needs that arent addressed by agencies
and ad tech companies, added DeRuggiero.
In this context, healthcare IT products are
the most advanced verticals served by the
SRAX digital media management platform.
Social Data and
Programmatic Technology:
The Winning Combination
While most companies now use social media
to gain customer insight and generate brand
awareness, few have been able to marry this
to the advantages offered by programmatic
and RTB technologies.
Over the few years SRAX has succeeded in
developing solutions that directly meet this
need: SRAX Social, SRAX App and SRAX
Reach The company has continued to build
out recurring revenue streams on both sides
of the business with ongoing development
and enhancements to differentiated propri-
MicroCap Review Magazine 15

On June 28, 2017, SRAX announced the launch of
a new social boosting tool for digital marketers and
content owners to create posts and promote them
beyond their Facebook Page communities. The
tool is the first of numerous planned monetization
opportunities developed and integrated into the
SRAX Social platform.
etary technology that enables its clients to
unlock social data.
SRAX Social - SRAX Social is a social
media management platform that uses pro-
grammatic technology and big data to share,
schedule and automate social media content.
On June 28, 2017, SRAX announced the
launch of a new social boosting tool for
digital marketers and content owners to cre-
ate posts and promote them beyond their
Facebook Page communities. The tool is
the first of numerous planned monetization
opportunities developed and integrated into
the SRAX Social platform.
SRAX App - Recognizing the potential of
the growing mobile opportunity, Miglino
guided the development of the companys who live in the U.S. and have an interest in
SRAX App product. With SRAX App, adver-
tisers are able to automatically aggregate
social media feeds and online content chan-
nels into an app. Using the product, they can
target valuable interest-based niche audience
Very few companies have tackled the idea of fusing
social and programmatic technology. And yet,
SRAX is opening new doors for the advertising
world proving that its possible to develop
products that meet clients needs today while
anticipating the future of the industry.
16 MicroCap Review Magazine
segments, for example, males ages 25 to 40,
stock car auto racing. They can collect loca-
tion data to deliver push notification mes-
sages and launch promotions and exclusive
content all to increase brand engagement
and loyalty.
SRAX Reach - SRAX Reach, is a cus-
tom ad unit that enables marketers to buy
beyond the banner, says Miglino. SRAX
Reach combines display ads with native
premium advertising, imagery and story
content to deliver a compelling brand expe-
rience in a single industry standard unit.
Marketers can even pull in existing content
directly from their brands social channels.
Ad Technology Built for
Today and Tomorrows
Market
Finally, marketers and content owners across
verticals can do more with the data they
already have. SRAXs custom advertising
programs are built to perform utilizing
core technologies and generating recurring
revenue streams for each client.
The success of this approach is demon-
strated by the companys continued strategic
growth. With a focus on targeted higher
gross margin revenue, SRAX has significant-
ly improved its bottom line. Management is
also excited about the new product verticals
auto and sports that it launched in the
third quarter.
Very few companies have tackled the idea
of fusing social and programmatic technol-
ogy. And yet, SRAX is opening new doors for
the advertising world proving that its pos-
sible to develop products that meet clients
needs today while anticipating the future of
the industry. n
On the web:
www.srax.com
The company paid consideration to SNN or its affiliates for this article.
www.stocknewsnow.com
 R E A L E S TAT E C O R N E R
Gold with a Coupon Theyre not making more of
C
lichs perhaps, but they ring true for
Farmland. Sophisticated investors hold
farmland for a variety of reasons: as a
bond alternative; as an inflation hedge; and as a
truly uncorrelated asset that has held up through
major drawdowns in the broader markets.
Farmland is a unique financial asset, provid-
ing equity-like returns with bond-like volatil-
ity. Since its inception in 1990, the NCREIF
Commodity Cropland Index has reported
average annual returns of 10.7% with standard
deviation of just 5.2%, and in 26 years has
never had a negative year. Farmland histori-
cally has derived 4%-5% of its total return from
income and 6%-8% from appreciation.
It is important to note that when we speak
of Farmland, we are specifically talking about
U.S. row crop farmland which grows primar-
ily corn, soybeans and wheat used in livestock
and poultry feed. These are commodities
for which global demand is growing nearly
two times faster than productivity, but for
which it is difficult and expensive to add
new capacity (acreage). The result in most
years is tight supplies and high prices. Row
crops are distinct from (but often conflated
with) permanent crops (almonds, vineyards,
orchards) which have much greater volatility
and include a host of different risks associ-
ated with owning a biological asset (trees and
vines) vs. owning dirt.
why FArMlAnd now?
First, many investors are increasingly worried
about the next recession and about valuations
n BY PERRY VIETH
www.stocknewsnow.com
in the equity market. Faced with the prospect
of a bear market in equities, farmland has
proven highly effective providing diversifica-
tion during major drawdowns in the broader
market. Farmland returns are driven by fac-
tors (crop prices, increased animal protein
consumption in developing world, etc.) which
do not affect other asset classes. In the last
recession, when the S&P lost 46% from Q3
2007 to Q1 2009 and virtually all other asset
classes drew down, Farmland gained 18%.
Second, interest rates are rising and the
Fed is expected to continue to raise rates for
the next 12-18 months at least. Farmland is
an income generating asset but it does not
trade on yield like commercial real estate
or other institutionally held real assets. We
estimate institutional investors comprise less
than 5% of the purchases in the market.
The other 95% of the market is farmers, and
farmers dont trade farms on yield as inves-
tors do. Farmers trade farms based on the
economics of growing crops, and the bullish
impact of $5 corn would overwhelm any
bearish impact of 5% treasuries.
Finally, and perhaps most compelling, in
the face of high equities valuations and ris-
ing interest rates putting pressure on asset
values, farmland is at the bottom of its cycle
and is poised for recovery.
it.
ceres FArMs llc intro:
Ceres Farms acquires properties and leases them
to local farmers who grow corn, soybeans, wheat
or specialty crops such as vegetables on a sched-
uled rotation. Ceres is especially proud of the
extensive network of experienced farmers that it
has teamed up with to create a proven partner-
ship where all parties benefit. Ceres currently
owns over 300 farms consisting of 99,000 acres
across ten states. At June 30, 2017 Ceres Farms
had total assets of $611 million. Ceres Farms
investment objectives are to provide income,
and capital appreciation, with low volatility and
low correlation to other asset classes. n
Perry Vieth, is CEO of Ceres Partners that manages sev-
eral agriculture focused funds including Ceres Farms, a
diversified portfolio of U.S. farmland with over 300 farms
and 99,000 acres in ten states. Formerly Perry served for
ten years as Chief Investment Officer at PanAgora Asset
Management in Boston, and he also served as a portfolio
manager at Fleet Investment advisors, Fuji Securities and
Chicago Research & Trading Group where he began
his trading career at the Chicago Mercantile Exchange
in 1986. From 1982 to 1986, Mr. Vieth practiced law
in Chicago specializing in securities and corporate law.
He graduated from the University of Notre Dame Law
School with a J.D. and obtained a B.S. in accounting
from Marquette University. He is a Chartered Financial
Analyst and member of the Boston Securities Analyst
Society. Perry serves on the University of Notre Dame
Law Schools Advisory Council and several charitable
organizations Board of Directors.
www.cerespartners.com
The company paid consideration to SNN or its affiliates for this article.
MicroCap Review Magazine 17
 P R O F I L E D C O M PA N Y
lucara diamond corp.
L ucara Diamond Corp. is a Canadian diamond min-
ing company with a producing mine and prospecting
licenses in Botswana.
William Lamb, President & CEO
18 MicroCap Review Magazine
tsx, bse, oMx: luc, otc MArkets: lucrF
With its head office in Vancouver, Canada,
Lucara is a member of the Lundin Group of
Companies. Founded over forty years ago
by mining magnate Adolf H. Lundin, and
now headed by his son, Lukas H. Lundin the
Group has garnered a reputation of being
one of the most recognized and respected
groups in todays global resource industry.
The Group operates in over twenty counties
worldwide and across a variety of commodi-
ties, with Lukas H. Lundin as the Chairman
of many of the group companies, including
that of Lucara Diamond Corp.
Lucara has a strong, highly experienced
management team, lead by William Lamb,
the Companys President and CEO. William
has over 23 years experience in mining and
operations in Canada and several Southern
African countries, including 13 years with
De Beers working across their operations
in Southern Africa and Canada focusing on
heavy mineral concentration, project devel-
opment and operational readiness. William
joined Lucara in 2008 and was instrumental
in the acquisition of the AK6 asset, and
developing it into Lucaras wholly owned,
principle asset - The Karowe Mine.
Through its 100% owned subsidiary,
Boteti Mining (Pty) Ltd., Lucara markets and
sells rough diamonds from its sales office in
Gaborone, Botswana through Regular and
Exceptional Stone tenders to an interna-
tional customer base in compliance with the
Kimberley Process Certification Scheme.
inVestMent hiGhliGhts
Producer of an extraordinary number
of large gem quality Type IIa diamonds:
131 diamonds have sold for >
US$1 million each (Total value
in excess of $520 million)
21 diamonds for > US$5 million
each
7 diamonds for > US$10 million
each
93,499 carats of +10.8ct dia-
monds recovered as of end of
Q1 2017
Recovery of approximately 20% of +300
carat stones ever recorded - including 2 of
the worlds largest gem quality diamonds
(position number 2, the 1,109 carat Lesedi
La Rona diamond and position number 6,
the 813 carat Constellation diamond)
Average diamond value achieved in
2016 was US$824 per carat, four years into
Karowes approximately 15-year mine life
Revenue guidance for 2017 is $200 -
$220 million (exclusive of Lesedi La Rona)
Progressive Annual Dividend of
CDN$0.10 for 2017 (a 47% increase over
2015) due to strong cash flow generation
and balance sheet
Organic growth potential through
expansion of resource, exploration of sur-
rounding prospecting licenses and through
M&A
www.stocknewsnow.com

Lesedi La Rona Diamond 1,109
carat Type IIa
Although still in its infancy as a diamond
producer, Lucara has been making history as
one of the foremost producers of large, high
value gem quality diamonds accounting for
approximately 20% of all +300 carat stones
on record, and achieving some historical
prices for its rough diamonds, including the
sale of the 813 carat Constellation diamond
for $63.1 million in May 2016 the highest
price per carat ever received for a rough dia-
mond. (all dollar amounts are in US Dollars,
unless otherwise stated).
Karowe has an annual production of
approximately 300,000 carats, including
large, high value gem quality diamonds, and
generates approximately US$200 million in
annual revenues - excluding the sale of any
truly exceptional diamonds.
The Karowe Mine and Boteti Mining (Pty)
Ltd. operate in the country of Botswana
- one of Africas most stable mining juris-
dictions and the continents longest con-
tinuous multi-party democracy. Botswana
is one of the worlds largest producer of
diamonds, with a history of diamond explo-
ration dating back to 1954 when De Beers
began prospecting for diamonds in, the then
British Colony, Bechuanaland Protectorate.
www.stocknewsnow.com
Diamond mining and the trade of diamonds
has transformed the country into a middle-
income nation. In 2016, diamond sales and
production represented approximately 33%
of Botswana GDP (approximately US$3.3
billion).
Lucaras Karowe Mine, then the AK6
Kimberlite, was discovered by the De Beers
group of companies in 1969. After many
years of sitting idle, advanced exploration
was conducted on AK6 from December 2003
through May 2007 by Boteti Mining (Pty)
Ltd. (then Boteti Exploration Pty), through
joint venture partners De Beers Exploration
and African Diamonds (AFD). This
advanced exploration revealed that the AK6
Kimberlite was larger, and of higher grade
than previously estimated. In 2009, Lucara
acquired an initial 70% interest in Boteti
from De Beers Exploration, then holder of
a 100% interest in the AK6 Project, and in
2010 increased its interest to 100% through
the acquisition of AFD.
In 2010, Lucara completed a feasibility
study on the AK6 kimberlite, indicating a
15-year life of mine, based on an open pit
mine plan, to a depth of 324 m on the tri-
lobate kimberlite pipe (North, Central and
South lobes, respectively). The combination
of advanced exploration and the completed
feasibility study resulted in an NI 43-101
report, an indicated resource from surface
to a depth of 400 m of 51 mt containing
8.2 million carats; and an Inferred resource
from 400 m to 750 m of 21 mt containing 4
million carats. The mine plan was based on
a Probable reserve from surface to a depth
of 324 m of 36.2 mt containing 6.3 million
carats. This led the Company to a construc-
tion decision. Construction of the Karowe
Mine was completed in Q1 2012, with com-
missioning and ramp up to full operational
capacity completed in Q3 2012.
MINING AND PLANT UPGRADES
Subsequent to the commissioning of the
Mine during 2012, the processing plant
performed successfully. However, Lucara
recognized the requirement to address the
production throughput risk identified in the
feasibility study, that being hard and higher
yielding (increased DMS load) kimberlite
at depth. An additional risk that became
apparent was the consistent recovery of very
large and high value diamonds above the
maximum size limit for which the process
and recovery circuits were designed.
To mitigate these risks, a number of plant
upgrades were initiated during 2014. The
upgrades included the introduction of a
large diamond recovery circuit, designed
to recover large diamonds prior to major
crushing of ore, additional crushers to liber-
ate diamonds from the hard fresh kimberlite,
and additional X-ray Transmission (XRT)
technology to process the higher yield mate-
rial at the desired throughput.
The plant upgrades allowed for an increase
in diamond size recovery from 30mm to
90mm (approx. 2,500 carats).
In Q3 2015, immediately following the
commissioning of the new plant and incor-
porating XRT technology, Lucara recov-
ered what is currently the second largest
gem quality diamond ever recorded the
1109 ct Lesedi La Rona diamond and
within 24 hours of this historical recovery,
Lucara recovered the sixth largest gem qual-
ity diamond every recovered the 813ct
Constellation Diamond as well as a 374ct
gem quality diamond.
In 2016, the Company undertook the deci-
sion to increase its recovery size capacity, and
initiated another processing plant upgrade
including a Mega Diamond Recovery circuit,
its purpose being the recovery of value as
early as possible in the process plant thus
reducing the possibility of breaking large,
extremely valuable diamonds. Using the
highly successful XRT technology incorpo-
rated in the first process plant upgrade, the
Mega Diamond Recovery system is intended
to recover diamonds in excess of 90mm,
and up to 120mm in size (approx. 5,000 car-
ats). Commissioning of the Mega Diamond
Recovery upgrade is anticipated to be com-
plete in Q3 of 2017.
MicroCap Review Magazine 19
resource uPGrAde And
exPAnsion
Results from its early stage production, as
well as the recoveries from the upgraded
plant, led the Company to a decision to
further test the AK6 Kimberlite at depth. In
Q4 of 2016, the Company initiated a 10,000
m deep drill program with a goal to bring
inferred mineral resources into the indicated
category. The drill program, completed in
Q1 2017, is designed to increase confidence
in the geological model for the south lobe of
the AK06 kimberlite and provide sufficient
data and material for an updated resource
to be utilized in an underground option
study for the Karowe mine. The updated
resource for the current inferred portion
of the Karowe Mine is expected to be com-
pleted in Q4 2017.
In addition to a potential resource upgrade
the Company is also involved in exploration
activity. In 2014, the Company was awarded
two precious stone prospecting licenses that
are known to host the BK02, AK11 and
AK12, AK13 and AK14 kimberlites. The
prospecting licenses are located within a dis-
tance of 15 km and 30 km from the Karowe
mine.
AK11 - During Q2 2017, the Company
initiated a large diameter drilling (LDD)
sampling program at the AK11 kimber-
lite. Drilling has commenced on the pilot
drill-hole aspect of the program. Material
recovered from the LDD samples will be
processed at the Companys Bulk Sample
Plant located at the Karowe Mine.
AK13 - During Q2 2017 logging and sam-
pling of AK13 was completed and microdia-
mond samples shipped for analysis. Results
are expected during H2 2017.
lucArA PAys diVidends
The revenues generated through Regular
and Exceptional Stone tenders have gener-
ated strong cash flows and balance sheet
for Lucara. Within its first two years of
full production, Lucara found itself in the
20 MicroCap Review Magazine
AnnuAl diVidend
PAyMents since
iMPleMentAtion oF A
ProGressiVe diVidend
Policy, in 2014.
2014 CDN$0.04/share
2015 CDN$0.04/share
Introduction of a progressive
dividend policy
2016 CDN$0.06/share (a 50%
increase from 2015);
plus a special dividend of
CDN$0.45/share
2017 CDN$0.10/share anticipated
(YTD 2x quarterly payments of
CDN$0.025 ea.)
favourable position of becoming the first
Lundin Group Company to pay dividends to
its shareholders. With its strong cash flow
generation and strict investment criteria,
Lucara has rewarded shareholders with its
dividend, continues to advance its explora-
tion program and resource expansion work
at Karowe and retains the potential for M&A
activity.
In the three years since implementing its
progressive dividend policy Lucara has made
approximately US$200 million in dividend
payments to its shareholders - more than
the total sum of equity ever raised by the
Company.
These dividend payments equate to
approximately 20% of its gross revenues to
date, and have provided attractive dividend
yields in comparison to its peers and the
broader mining sector.
sociAlly resPonsibility
Lucara not only pays dividends back to its
shareholders, they re-invest in Botswana and
their employees, making strong contribu-
tions in local communities through the pay-
ment of taxes and royalties and by developing
businesses through the Lundin Foundation
and its Karowe Emerging Entrepreneurial
Fund. Since 2012, Lucara has re-invested
approximately 65% of its revenues back into
Botswana through taxes, operating and proj-
ect costs, procurement, and by employing
96% of its workforce from Botswana.
the diAMond MArket &
lucArA
Despite challenging Diamond Market con-
ditions in 2016, Lucara generated record
revenues of $295.5 million or $824 per carat,
paid $149.7 million in dividends (including
a CDN$0.45 per share special dividend in
July 2016), and reached its US $1 Billion in
diamond sales milestone.
The Company is confident that it has the
production profile to withstand downturns
in the general diamond market. The Karowe
mine production differs from its peers due to
the coarse nature of the diamond population
and the consistent recovery of high quality
Type IIa diamonds which have resulted in a
strong client following.
Lucara recovers a significant number of
+10.8 carat gem quality diamonds. Over
the past 4.5 years of operations, and as min-
ing has started to focus on the south lobe
which constitutes the majority of mining
in the years to come, greater than 65% of
Lucaras revenue has been derived from 5%
of its production volume. This places Lucara
in a relatively unique position in the dia-
mond market, as the Karowe production is
impacted less by downturns when compared
to other production profiles.
For more information on Lucara Diamond
Corp., contact Investor and Public Relations at:
Email: info@lucaradiamond.com
Tel: 604-689-7842:
www.lucaradiamond.com n
The company paid consideration to SNN or its affiliates for this article.
www.stocknewsnow.com
 www.thecse.com
info@thecse.com
@CSE_News

THE EXCHANGE FOR CANNABIS

SECTOR GROWTH COMPANIES
The Canadian Securities Exchange (CSE) is a service-oriented exchange ideally suited
for cannabis-related businesses across all industry sectors including cultivation & sale,
life sciences, specialty finance, and technology.

The result? A progressive business environment offering the lowest cost of public
capital supported by a robust secondary market. See several examples below of
cannabis-related companies maximizing the benefits of listing on the CSE, including:

BE AHG BCC CRZ

MARI IAN IN LDS

KEY METRICS ROBUST SECONDARY

H1 2017 MARKET LIQUIDITY

2.8B
Capital formation has been supported by
shares a robust secondary market for Cannabis
traded issues. Recent top volume traders include:

$1.1B
TOP CANNABIS TRADERS BY VOLUME H1 2017
value of
Monthly
shares NAME
AVG
traded Matica Enterprises Inc. 71,367,483

45+
MYM Nutraceuticals Inc. 35,731,883
Cannabis Nutritional High International Inc. 31,206,382
companies Umbral Energy Corp. 28,831,148
trading on
New Age Farm Inc. 28,387,034
the CSE

www.stocknewsnow.com MicroCap Review Magazine 21

 OPINION
Cannabis Q&A with
Adam Selkin
M
r. Selkin has 20+ years of expe-
rience in capital markets and
banking with microcap compa-
nies. He has spent the last five years focused
on the cannabis industry and built a can-
nabis practice. He has a vast network of can-
nabis relationships and has experience in
investment banking, business development,
and mergers and acquisitions.
Shelly Kraft: Whats your background?
Adam Selkin: I have been on Wall St. since
1996. I started off as a retail stockbroker at
Oppenheimer, then Smith Barney until I went
into Capital Markets and Institutional Sales
and Banking at CE Unterberg Towbin in
2005. In 2008 my partners and I began
the Special Equities Group, a division
of Chardan Capital Markets where we were
responsible for financing and marketing
of microcap companies for the firm. We
were consistently in the top 3 performers in
thePIPEstables.
22 MicroCap Review Magazine
Shelly Kraft: How long have you been
in the cannabis sector? and what is your
experience?
Adam Selkin: Since the election cycle in
2012 I have been looking at the public can-
nabis sector. I have been in and around can-
nabis my entire adult life, have many friends
that own and operate business in various
states, and most of them actually began on
the black market. When I was in high
school and college I traveled around with
the Grateful Dead and Cannabis became
a passion of mine forever. In about 2013,
my analyst at Chardan suggested we make
cannabis a focus at the firm as it became
an emerging sector in the public markets
because it seemed a change was coming in
a progressive political environment out of
Washington D.C.
At that time, what my analyst did not
know, is that my personal desire to under-
stand much more about the industry was
already brewing since my nephew suffers
from epilepsy, and as a family we were
searching out the possible benefits of treat-
ing him with cannabis. Chardon was the
very first FINRA approved firm on Wall
St. to write research and raise money for
cannabis related businesses and companies.
Massroots was our first cannabis related deal
and we raised them their first money in con-
junction with becoming a public company.
Shelly Kraft: How has the sector trans-
formed over the last several years?
Adam Selkin: The cannabis sector has
started to transform into a true emerging
market. The cannabis companies in the
public market have in a sense gone from
being completely obscure, working under
the radar, and not having business models
to becoming more focused on real cannabis
opportunities in and around the industry,
with real business models and quality man-
agement teams to execute. Today there are
many established companies trading publicly
within a huge ecosystem from agriculture,
medical marijuana, edibles, infrastructure,
social media, recreation, entertainment and
vastly growing and diversified industries.
Shelly Kraft: How would you suggest an
investor build a portfolio in cannabis
stocks?
Adam Selkin: My opinion is of course to
do extensive due diligence, seek professional
advice, read trade reviews and newsletters
and stay informed. I would diversify within
the cannabis space. My suggestion would
be to look at a couple of different buck-
ets: Healthcare/Biotech, Technology, Retail
& Cultivation and Products and Services to
the industry.
Shelly Kraft: What are some downside
risks to investing in cannabis stocks?
The cannabis stocks can have extreme vol-
atility and struggle for financing.With news
going back and forth on the legalization/
prohibition front, public cannabis companies
tend to be very volatile in price/volume and
trade on general industry news surrounding
cannabis versus the fundamentals of their
business.
For more information: Adam Selkin:
www.slee3.com n
www.stocknewsnow.com
 AC C O UN T IN G COR N ER
New Financial Reporting Rules Will Simplify Accounting On Some Transactions
A fter what seemed an endless flow of new
accounting rules that have made the
audits of micro and small cap companies more
complex and difficult, the Financial Accounting
Standards Board (FASB) has updated two
areas of accounting that may offer reporting
relief for micro and small cap companies.
Recently, the FASB simplified accounting
requirements for companies that issue equity-
linked financial instruments (e.g. convertible
debt or convertible preferred stock, or war-
rants) with down round features, which will
substantially reduce the number of derivative
liability instruments that have become com-
monplace on the balance sheet of small cap
companies. The FASB also narrowed the defi-
nition of a business, providing a new frame-
work for making reasonable judgments about
whether a transaction involves an asset or a
business. This is important because it should
simplify the accounting for certain acquisitions
that were formerly considered a business.
deterMininG deriVAtiVe
liAbilities
Under current Generally Accepted Accounting
Principles (GAAP), when an equity-linked
financial instrument with down round features
is issued, the embedded conversion feature
is usually required to be separated and rec-
ognized as a derivative liability, with changes
in the fair value of the derivative recorded in
earnings each reporting period, making the
measurement of these derivatives complex and
costly. In addition, many users of financial
statements have suggested that this accounting
n BY COREY FISCHER, CPA
www.stocknewsnow.com
does not reflect the true economics of a down
round feature, and that the volatility in earn-
ings caused by the change in the fair value of
derivatives is inconsequential to most readers.
The FASB update will allow companies to
exclude a down round feature when determin-
ing if a financial instrument (or embedded
conversion feature) should be recorded as a
derivative. Companies will instead recognize
the value of the down round feature when it
is triggered (that is, when the strike price has
been reduced). This is great news as it now
will eliminate one of the most complicated,
and some will say most distortive, aspect of
accounting currently faced by companies.
While some of the analysis required
under current accounting will be eliminated,
preparers will still be required to perform
detailed analysis to determine if instruments
are to be classified as equity or liabilities (e.g.
sufficient authorized shares, fundamental
transaction clauses, etc.).
deFinition oF A business
clAriFied
This FASB change affects the definition of
acquisitions, disposals, goodwill, and con-
solidation. Generally, in an acquisition of a
business, assets and liabilities acquired are
recorded at fair value and goodwill is recog-
nized for any excess consideration. Assumed
contingencies are typically recognized and
measured at fair value. In an asset acquisi-
tion, the acquired asset is recorded at cost,
goodwill is not recognized, and contingen-
cies assumed are recorded only if probable.
In January 2017, the FASB narrowed the
definition of a business and provided a new
framework for making reasonable judgments
about whether a transaction involves the
acquisition of an asset or a business. FASB
clarifies that when substantially all the fair
value of the gross assets acquired (or disposed
of) is concentrated in a single identifiable
asset or a group of similar identifiable assets,
the set is not a business. The new rule also
requires that a set (of assets and activities)
cannot be considered a business unless it
includes, at a minimum, an input and a sub-
stantive process that together significantly
contribute to the ability to create output.
This change to the definition of a busi-
ness is likely to result in more acquisitions
being accounted for as asset acquisitions in
all industries. This is extremely important
as it makes the accounting for these types
of transactions much simpler. It could also
eliminate the costly expense of employing an
outside valuation firm in assisting with the
purchase price allocation in recording the
initial purchase, and also could eliminate the
need for continuing impairment testing of
the acquired goodwill and intangibles going
forward that is required under the old rules.
One potential issue worth noting is that the
SEC definition of a business is not affected by
the change in the FASBs definition of a busi-
ness. An asset purchase under GAAP that is
deemed a business by the SEC may require the
company making the acquisition to submit past
audited financial statements of the business in
a Form 8-K, whereas if it were an acquisition of
an asset, audited financial statements may not
be required. It remains to be seen if the SEC will
adopt the same position as the FASB. If it does,
this may significantly reduce the need for the
costly presentation of prior year audited finan-
cial statements of the acquired asset.
Accounting and disclosure rules are com-
plex, cumbersome and often difficult in appli-
cation. Please consult experienced auditors or
consultants before entering into transactions. 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 the Big 4 accounting firms, and as an SEC report-
ing officer for a number of NASDAQ-listed companies.
Based 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.
www.weinbergla.com
MicroCap Review Magazine 23
 PROFILED COMPANY tsx-V: eMh, otc MArkets: eMhtF
emerald health
therapeutics, inc.
The Ultimate Cannabis Power Play: How Canadas
Emerald Health Therapeutics Can Become the
Worlds Largest Cannabis Cultivator
I n the multi-billion dollar North American cannabis industry,
this is surely the most ambitious power play of all.
Amazingly, it involves a low-key, publicly-
listed Canadian company from laid-back
British Columbia, rather than a deep-pock-
eted US corporate powerhouse.
Until recently, Emerald Health
Therapeutics (TSX.V: EMH) (OTCQX:
TBQBF)has been best known for being an
R&D incubator of proprietary intellectual
property in the race to innovate cannabis-
based medicinal therapies.
Now this small Victoria-based cultivator
of pharmaceutical-grade cannabis is throw-
ing down the gauntlet to its much larger
rivals.
Emerald Health has announced plans to
become Canadas most dominant cannabis
grower. This involves a shrewd leveraging
strategy. Indeed, it appears to be an opti-
mal template for scaling-up production in
a big way, which can be achieved at a rela-
tively low-cost and on an expedited timeline.
More on this in a moment.
First, investors need to know whats ulti-
mately at stake.
24 MicroCap Review Magazine
the holy GrAil oF cAnnAbis
is FinAlly within reAch
Canadas largest industrial-scale cannabis
growers have lately been jostling for pole
position in the race to capture the lions
share of Canadas looming legal recreational
market.
Early-market entrants will have an unprec-
edented opportunity to earn brand loyalty
among as many as an estimated eight mil-
lion Canadians approaching 25% of the
population.
In fact, this mainstreaming of cannabis
consumption is expected to be worth up
to CDN $10 billion a year, according to
investment industry analysts. And this new
marketplace will open up as early as next
summer.
So the small handful of big players among
Canadas industrial-scale growers are already
trying to out-do one another in the run-up to
the end of decades of prohibition.
They have each announced grandiose
plans for growing vast amounts of pharma-
ceutical-grade cannabis in an assortment of
www.stocknewsnow.com
new high-tech facilities. These operations
will involve modular structures ranging in
size from several hundred thousand feet to
as much as one million square feet. The big-
gest of them will cover an area larger than 20
football fields.
What all these in-development facilities
have in common is that they will each cost
around CDN $100 million dollars (or even
more) to build to full capacity. Also, each
of them will take a year or longer to com-
mission.
However, Emerald Health is taking a faster
and less risky approach to scaling-up in a
significant way.
Why Bigger is Better
Emerald Healths founder and Executive
Chairman of the Board, Dr. Avtar Dhillon,
is a former family physician. He is also part
of a US-based family business that is one of
Californias largest cultivators of fruit and
vegetables. So he benefits from consider-
able expertise in the science and logistics of
achieving impressive economies of scale.
In Canada, Dr. Dhillons apparent mas-
ter stroke involves his companys recent-
ly announced decision to team up with
Village Farms International Inc. (TSX:
VFF). Headquartered in Greater Vancouver,
Village Farms had sales of around CDN $206
million in 2016. It is also North Americas
largest technologically-advanced, low-cost
grower of supermarket produce.
This strategic alliance means that an exist-
ing network of sophisticated greenhouse
growing facilities will be re-purposed to pro-
duce recreational cannabis a much more
profitable venture.
Village Farms will initially contribute up
to 1.1 million square feet of existing state-
of-the-art greenhouse capacity to the 50/50
joint venture partnership.
All told, as much as 4.8 million square feet
of greenhouse infrastructure can ultimately
be retrofitted to cultivate cannabis via this
arrangement. This could yield up to 300,000
kilograms of dried flower cannabis annually.
www.stocknewsnow.com
Ultimately, this allows the company to facility in Victoria will continue to focus
develop value-added downstream products on R&D, manufacturing oils and servicing
namely cannabis oils on a massive medical patients.
scale. Which is very shrewd because sales of
cannabis oils in Canada are virtually dou- Investment Synopsis
bling every 90 days.
In fact, investment industry analysts fore- Emerald Healths joint venture partnership
cast that consumption of cannabis oils in with Village Farms is a game-changing dif-
Canada will expand exponentially for many ferentiator; it will allow them to capture
years to come, especially with the advent of a significant market share in a multi-billion-
recreational market. dollar recreational marketplace for cannabis.
Dr. Dhillon comments, Were already To this point, Emerald Health is commit-
positioning ourselves to be a world-class ted to becoming one of Canadas lowest-cost
leader in innovating value-added down- producers, which promises to be an enor-
stream products, such as cannabis oils. This mous competitive advantage. Additionally,
is where the biggest profit margins are. a major driver for the companys revenue
growth will be the mass-production of high-
Targeting the Multi-Billion margin cannabis oils.
Dollar Pain Management Due to the fact that this business model
Market can be rolled-out cost-effectively and with
reduced execution risk, investors are pre-
Dr. Dhillon is determined to make Emerald sented with a compelling value proposition.
Health a key player in Canadas burgeoning
big-dollar medical marijuana market. www.emerald.care n
Within months, his company intends to
launch gel capsules with consistent dosage
levels of cannabis oils that will meet Health
Canadas strict standards.
In particular, the companys scientists are
using advanced plant genetics to develop
optimal cannabis strains and cannabis oils
that can be dialled-in to treat specific types
of pain and sleep disorders.
According to Dr. Dhillon, By targeting
the requirements of healthcare providers
consistent dose, quality manufacturing,
oral delivery, and clinical evidence we
will engage the medical gatekeepers to sup-
port and expand the use of our medicinal
products.
This steadfastness to the companys core
competency can be seen in Emerald Healths
undertaking to develop 100,000 square feet
of state-of-the-art, indoor growing facilities
in Greater Vancouver. The new operation
will also include a laboratory to incubate the
companys intellectual property, specifically
plant genetics.
The companys existing pilot growing
The company paid consideration to SNN or its affiliates for this article.
MicroCap Review Magazine 25
 PROFILED COMPANY
inVo bioscience, inc.
I NVO Bioscience, Inc. offers the worlds newest reproductive technology
to help millions of infertile couples receive treatment.
INVO Bioscience is a small public company
(IVOB) that has developed a low cost, effi-
cient alternative to In-Vitro Fertilization
(IVF). The INVO procedure, using the
INVOcell device, is a game changing, revo-
lutionary process that is currently launching
in the United States. It has demonstrated the
same pregnancy rates and birth outcomes as
traditional IVF at approximately half the cost
of traditional IVF. The procedure, with the
newly FDA cleared device, has begun pen-
etrating the IVF market with more than 50
clinics now offering the procedure. Fertility
procedures are generally not covered by
health insurers, therefore they must be paid
by the patient out of pocket. The huge cost
of IVF has limited 88% of couples needing
fertility care in the U.S. from obtaining preg-
nancy and having a baby. INVO Bioscience
with its new technology is solving this prob-
lem.
Dr. Claude Ranoux and Kathleen Karloff,
the current CEO, founded INVO Bioscience
in 2007 to develop a device that could be
utilized to commercially implement Dr.
Ranouxs discovery of Intra-Vaginal Culture
(IVC). Dr. Ranoux, while practicing in his
26 MicroCap Review Magazine
homeland of France, lost electricity while
doing an egg retrieval on a patient. Since his
incubators were without power, he needed to
find a way to keep the eggs and sperm from
dying so he placed the eggs and sperm in a
small cryo-preservation tube and inserted
the tube in the females vaginal cavity to keep
them at body temperature. Later when he
removed the cryo-tube from his patient, he
discovered that there were nicely formed
embryos inside, hence discovering intravagi-
nal culture (IVC) of gametes.
The company went public via a reverse
merger in late 2008 to raise money to sup-
port the development, regulatory approv-
als and launch of the new medical device
that could be user friendly for physicians
for the IVC procedure. In early 2010, the
Companys stock was driven down to pen-
nies by an original reverse merger inves-
tor. To prevent dilution by selling penny
shares, the Company struggled to continue
the development of the INVOcell and secure
FDA clearance with little to no funds, paying
vendors with restricted stock and taking no
salaries for themselves.
Despite the lack of significant funding,
the company received FDA approval in
November 2015 through a DeNovo applica-
tion inclusive of 450 clinical cycles proving
the INVO process was equivalent in efficacy
and safety to IVF. A limited product launch
was initiated in 2016 with a few key physi-
cians to assure the device procedure worked
well in a commercial environment before a
full launch was initiated. During this time,
Kevin Doody, MD, who is currently the
President of SART (Society of American
otc MArkets: iVob
Reproductive Technologies) and a major U.S.
thought leader, began offering INVO cycles
along with a few additional early adopters.
The outcomes were excellent.
INVO Bioscience launched into the U.S.
fertility market at the American Society of
Reproductive Medicine (ASRM) Congress
in October of 2016. The company, since this
initial launch, has trained physicians and
embryologists in over 50 IVF centers to offer
the procedure at approximately half the cost
of IVF.
Currently, the Company is continuing the
expansion of INVO across North America,
despite limited resources. The companys
mission is to provide the INVO procedure to
those that previously could not afford or had
access to fertility care. In additional to selling
the devices to physician, INVO Bioscience is
looking at plans to partner with physicians to
open INVO centers in areas where the cost
and availability of IVF makes it unattainable
for most couples. This will even further
grow the Companys market share opportu-
nity as well as serve patients who otherwise
would not be treated.
www.invobioscience.com n
www.stocknewsnow.com
 PROFILED COMPANY
Pharmacyte biotech, inc.
P harmaCyte Biotech, based in Laguna Hills, California, is a clinical stage
biotechnology company focused on developing and preparing to
commercialize unique, effective and safe treatments for cancer and diabetes
using its proprietary cellulose-based live-cell encapsulation technology,
Cell-in-a-Box.
While the company has a number of cellular
therapies in its product pipeline, includ-
ing therapies for locally advanced, inoper-
able and non-metastatic pancreatic cancer
(LAPC), type 1 and insulin-dependent type
2 diabetes, all abdominal cancers, and a
cellular therapy using cannabinoids to treat
cancers of the brain and other hard to treat
solid tumors, it is the companys therapy for
pancreatic cancer that is PharmaCytes lead-
ing product candidate.
After meeting with the FDA in early
2017 to discuss its upcoming clinical trial
in LAPC, PharmaCyte began preparation of
an Investigational New Drug application to
request a pivotal clinical trial be approved to
address a critical unmet medical need in the
pancreatic cancer communitya therapy
for LAPC patients that no longer respond
to the current standard of care, Abraxane +
gemcitabine. PharmaCytes Chief Executive
Officer, Kenneth L. Waggoner, has sur-
rounded the companys technology with
three of the leading oncologists in the world
in developing therapies to treat pancreatic
cancer - Dr. Daniel Von Hoff; Dr. Manuel
Hidalgo; and Dr. Matthias Lhr. Together
they designed the clinical trial to position
www.stocknewsnow.com
otc MArkets: PMcb
the companys cellular therapy to address the cer can serve as a consolidation therapy
unmet medical need. with Celgenes Abraxane + gemcitabine and
PharmaCytes signature live-cell encapsu- address the unmet medical need for these
lation technology, Cell-in-a-Box, consists pancreatic cancer patients. PharmaCytes
of different types of genetically modified pivotal clinical trial will be a two-armed,
living cells depending on the disease being 250-patient trial with 125 patients in
treated. For its leading product candidate, each arm. The trial will be conducted in
pancreatic cancer, about 10,000 genetically the U.S. and Europe by premiere oncol-
modified live cells that produce an enzyme, ogy CRO, Translational Drug Development
which converts the chemotherapy prodrug (TD2). The company has selected Dr.
ifosfamide into its cancer-killing form, are Manuel Hidalgo, the Clinical Director of the
encapsulated in porous, pinhead-sized cap- Rosenberg Clinical Cancer Center and Chief
sules. About 300 of these capsules are placed of the Division of Hematology Oncology
in the blood supply as close to the pancre- at Beth Israel Deaconess Medical Center in
atic tumor as possible, and then one-third Boston, to be the Principal Investigator.
the normal dose of the chemotherapy drug
is given to the patient intravenously. The www.pharmacyte.com n
prodrug is normally activated in the patients
liver. By activating the prodrug using the
Cell-in-a-Box capsules, PharmaCytes cel-
lular therapy acts as a type of artificial
liver. Using this targeted chemotherapy,,
PharmaCyte is creating an environment that
enables optimal concentrations of the can-
cer-killing form of ifosfamide at the site of
the tumor. Because ifosfamide has such a
short half-life, it results in little to no col-
lateral damage to other organs in the body
and significantly reduces tumor size with no
treatment-related side effects.
The goal of PharmaCytes upcoming clini-
cal trial in LAPC is to show that the com-
panys cellular therapy for pancreatic can-
The company paid consideration to SNN or its affiliates for this article.
MicroCap Review Magazine 27
 P R O F I L E D C O M PA N Y
riwi and the next
Generation of Global
Applied Analytics
E
ver since my graduate work at
Harvard studying the misery
after a pandemic or terrorist
attack, Ive been fixated on one problem:
How do you obtain scientifically reliable,
random and predictive data about peoples
true fears, actions and behavior from any-
where in the world? asks Neil Seeman,
the founder and CEO of RIWI Corp. (CSE:
RIW).
For example, how do you know whether
people will see a public health safety mes-
sage and then take a vaccine so they dont
spread a lethal virus? Will a video mes-
sage campaign about the brutality of ISIS
work to stamp out violent radicalization?
Until RIWI, the Internet has been unable to
answer these questions.
Neil L. Seeman BA, J.D., MPH ,
Founder and CEO
28 MicroCap Review Magazine
cse: riw & otc MArkets: rwcrF
Since the 1990s, the public has become
accustomed to unreliable, unscientific opin-
ion data from online panel surveys, where
people earn rewards or cash in exchange
for opinions about political candidates or
products. By the mid-2000s, social media
analysis was even less reliable than panels as
a way to assess changing public sentiment.
Then, in 2006, Neil and his brother Bob
were studying new advertising models of
website domain addresses (like woma.com).
Thats when Neils business epiphany came.
RIWI was born as an idea I sketched
on my infant daughters erasable marker
art easel in 2006, Neil says. My brother,
an expert in website domain names, had
been seeing erratic trends in website adver-
tising revenues. Even though he owned
great websites, we knew we werent going to
become billionaires by selling ads online. So
I showed him a crude algorithm on the art
easel about how we could access millions
of rotating websites in real-time from any
country to intercept people randomly and in
a scientifically representative fashion and get
opinions from people who dont post online
or participate in survey panels. We did lots
of cool stuff, including predicting the fall
of Mubarak during the Arab Spring, which
earned us immediate attention in the inter-
national security sector, says Neil.
Someone had to eat into the margins of
the large polling and market research firms,
so why not me? Neil also felt there was a
massive first-mover opportunity for mone-
tizing the enormous data the Company could
obtain that had nothing to do with market
research but with what is now called applied
analytics, a $150 Billion annual market that
enjoys the highest premium pricing in Big
Data since it offers businesses continuous
machine learning for the broadest possible
range of insights. For example, the Company
could uniquely help government agencies
measure whether an operation in a war zone
was meeting its objectives, or whether peo-
ple were witnessing corruption among pub-
lic officials. Between me, my brother, and
Alton Ing the Chief Technology Officer in
the research unit that I ran at a College I
couldnt think of a trio who knew more about
how to build out the technology for this
amazing opportunity, states Neil.
RIWI incorporated in 2009 and was at
the side of his desk as cool and disruptive
but Neil says that he didnt chase enterprise
clients until mid-2012.
Even though the Company had solved the
barrier-to-entry risk through strong intel-
lectual property, building strong data and
technology partnerships, and through prov-
ing out the technology in academic studies
and in client use cases, it needed a strategic
investment without turning to offers from
dilutive Venture Capital.
So Neil pitched the idea to his founding
shareholders, Robert Pirooz and Ross Beaty,
the well-known entrepreneurs and investors
of Pan American Silver fame (TSE: PAA),
and they jumped on it. They hammered
www.stocknewsnow.com
home the importance of keeping things lean.
The Company hired a small management
team with proven expertise across four busi-
ness lines: consumer research (with a focus
on emerging markets); global development
research (contracting in long-term agree-
ments with governments and with prime
contractors to G7 nations); international
security; and global finance. The Company
discovered the best way to scale was through
long-term agreements and monthly sub-
scriptions, Neil says.
Our marketing, capital formation and
business strategy then fell into place quickly.
We needed a business strategy that leveraged
the financial benefits of long-term agree-
ments and could capitalize on our marquee
clients, such as the Bill & Melinda Gates
Foundation, Harvard University, the United
Nations, the World Bank, and the US State
Department. Marketing in three of our four
target sectors was relatively easy since cli-
ents in security, the development sector and
finance work in tightly knit communities.
The Company found marketing more
challenging for consumer insights work.
Even the prestigious awards from the mar-
ket research industry that the Company
won could not raise the awareness it needed
in that sector. RIWI is a five-time win-
ner of the Top 50 Most Innovative GRIT
award, the 2013 IIeX Disruptive Innovation
Award and is a winner of the coveted Next
Generation Market Research Award. When
the Company struck a sales partnership with
the leading Japanese research firm Cross
Marketing Inc. (TO: 3675) in Tokyo, market-
ing across Asia was easier. RIWI discovered
it needed to focus mostly on long-term
opinion trackers in the topic areas that the
Company was the best in the world at, such
as highly sensitive topics (e.g., hypertension
prevalence, attitudes toward ISIS, or recre-
ational marijuana use market sizing), or top-
ics that required the opinions of huge num-
bers of Millennials, especially men under
35, a key demographic that online panels,
telephone surveys and social media analytics
increasingly couldnt reach.
www.stocknewsnow.com
Our technology won us increasing atten-
tion, and so did our prediction for finance
clients of the election of President Donald
Trump, as well as our research with Oxford
and University of Manchester academics on
the turnout model that would decide Brexit.
We were also the only Company to predict
the stunning, precise margin of defeat for the
Italian constitutional reforms in December
2016.
Capital formation needed to align with
the Companys business strategy and be as
non-dilutive as possible, Neil adds. A pub-
lic listing gave us flexibility: given that costs
associated with increased sales in long-term
agreements were low for RIWI, going public
on the CSE without a raise made sense. RIWI
is now a popular microcap with enormous
scalability, great backers, strong governance,
the opportunity to cross-list onto major US
exchanges when ready, and to accept tactical
private placements from hedge funds (which
occurred in April 2016) and from strategic
investors.
RIWI has advanced its technology into an
Information-as-a-Service (IaaS) and global
applied analytics firm. It has engaged more
than 1 billion people in the world to collect
message testing data, behavioral reaction
data, and survey data. The ongoing machine
learning and data feeds provide clients, in
customizable dashboards and in an extreme-
ly wide array of data file formats, continuous
applied analytics, not just data dumps. RIWI
is perfectly poised for explosive growth since
it is only using a fraction of one percent of
the Companys processing capacity and its
software scales horizontally to manage mas-
sive demand. RIWIs big agenda is growth.
That means gaining more long-term agree-
ments, more key accounts, and becoming
more of a direct supplier to governments, in
addition to being a sub-contractor to more
major organizations such as Freedom House,
for which RIWI is the sole digital data sup-
plier in a consortium with a five-year agree-
ment to the US Agency for International
Development (USAID). Management aims
to move rapidly such that a short contract
is one year, the average engagement is two
years, with upper-level contracts of 5-15
years. It is expected that these contracts will
range in size from $2MM to $30MM.
We aim to be the Booz Allen Hamilton
(NYSE: BAH) of global applied analytics,
serving government agencies and global
consumer firms looking to understand
product uptake, usage trends or geopolitical
risk triggers in any part of the world, says
Neil.
The Company not only charges for its
unique services in a highly cost-effective
manner, but it also charges additional fees
for the number of users on the RIWI plat-
form. The applied analytics industry, under
all the Companys four business lines, is
large and growing: it includes the evaluation
budgets of roughly half of one percent of the
GDP of every G7 nation; the roughly $45
Billion (est. 2.2% year-over-year growth) in
the annual market research spend; the grow-
ing multi-trillion dollar efforts to combat
terrorism globally; the growing number of
quantitative-driven hedge funds devoted to
better understanding changing geopolitical
risk in all parts of the world; and growing
return-on-investment analytics critical to
the ever-rising (now more than $223 Billion)
worldwide annual digital advertising spend.
One final part of RIWIs path forward
is turning on its investor-relations engine
so that more than just the Companys tight
investor base and people close to the data
sector know about the Companys growth
trajectory and vision. Weve been under
the radar from a capital markets perspec-
tive. Thats going to soon change, says Neil.
What will never change is our commitment
to solving some of the hardest data chal-
lenges in the world to serve our customers
with a vital, increasingly intelligent data and
analytics stream that is otherwise unavail-
able in the global marketplace, he adds.
www.riwi.com n
The company paid consideration to SNN or its affiliates for this article.
MicroCap Review Magazine 29
 P R O F I L E D C O M PA N Y
nAsdAQ cM: Azrx

Azurrx bioPharma, inc.

AzurRX BioPharma (Nasdaq CM: AZRX) is an emerging biotechnology
company thats at the forefront of developing the latest therapies
for digestive orders through something unexpected: cheese. More
specifically, through an aerobic yeast found in one cheese and other
foods Yarrowia lipolytica.
If this novel cutting-edge approach sounds
unique, the results could be startling. Their
innovative approach could re-shift current
standards of care for chronic disease states
into the 21st century, like how early insulin
progressed from crude animal extracts, to
synthetic recombinant preparations of today,
potentially improving the quality of life for
patients.
The companys investigative treatment,
MS1819, is a recombinantly-produced pan-
creatic lipase product -- an enzyme used in
digesting and extracting energy from food, Figure 1: The Breakdown Mechanism of Macronutrients
which is made by re-combining the cheese Source: Company reports.

yeasts DNA with synthetic DNA. This treat-

ment is being evaluated for use in indi-
viduals who suffer from exocrine pancreatic
insufficiency, or EPI. These patients cannot
digest fat and typically have chronic pancre-
atitis (CP) or cystic fibrosis (CF).
Thijs Spoor, CEO
understAndinG ePi
EPI is a potentially life threatening gastroin-
testinal disease in which the pancreas does
not produce enough enzymes to adequately
digest food. The condition, often caused by
CP or CF, can lead to the bodys inability to
absorb fat and other essential vitamins and
minerals and result in malnutrition, weight
loss, blood clotting and bone disease.
Digestion of fat is critical for absorbing
essential vitamins like D, E, A and K into
the body. Pancreatic lipase (an enzyme that
breaks down fat) is responsible for 90% of
the fat digestion process so when the pan-
creas does not function, pancreatic exocrine
replacement therapy (PERT) must be taken.
Chronic pancreatitis is the most common
cause of EPI in adults, and is often caused
by a pancreatic inflammation, due to alcohol
abuse, smoking, or genetic mutations. The
estimated annual incidence rate of CP in
industrialized countries is 5-12/100,000 peo-
ple and the prevalence of CP is 50/100,000
people. Over time, the inflammation can
lead to irreversible damage to the pancreas,
including cells that secrete pancreatic diges-
tive enzymes and the cells that produce insu-
lin leading to diabetes.
For the approximately 30,000 people in
the United States who have CF, EPI is caused
by a mutated gene associated with viscous
secretions that obstruct the pancreatic duct,
leading to pancreatic ductal obstruction and
pancreatitis, pancreatic fibrosis, and EPI.
Only 10-15% of CF children have suffi-
cient pancreatic function, leaving 85-95%
with pancreatic insufficiency. By age one,

30 MicroCap Review Magazine www.stocknewsnow.com


Figure 2: Daily Dose MS1819 vs. Standard of Care PERT - Illustrating
Expected Substantial Reduction in Pill Burden and Size
Source: Company reports.
90% of children with CF may develop EPI,
according to researchers at the University
of Toronto. This is particularly dangerous
as malnutrition may affect growth patterns.
CF patients often require 20 50% more
fat-based caloric intake because of malab-
sorption.
Current Treatments and
MS819
The current treatment for most patients
with EPI, usually involves lifelong pancre-
atic exocrine replacement therapy, or PERT.
The goal of PERT is to help manage patient
malabsorption, by providing the patient with
pancreatic enzymes derived from animals.
However, several challenges exist to treat
EPI as currently available treatments offer
limited effectiveness due to their instabil-
Figure 3: AzurRx Product Pipeline
Source: Company reports.
www.stocknewsnow.com
ity in acidic environments like the stomach;
require a high number of pills be taken daily
leading to non-adherence; and are derived
from porcine, which carries a risk of trans-
mission of pathogens and manufacturing
inconsistency.
AzurRx BioPharmas MS1819 Lipase is
a non-systemic, yeast derived recombinant
enzyme being studied for the treatment of
EPI in patients with CP and CF that offers
the potential to fulfill critical unmet needs
for these patient populations. To date, early
research shows superior stability for MS1819
lipase at relevant intestinal acidic pH ranges,
favorable safety and efficacy profiles, and
decreased daily pill burden compared to
porcine pancreatic extract lipase.
Following regulatory approval in Australia
and New Zealand in 2016 to conduct a Phase
2 multicenter
dose escalation study in CP and pancre-
atectomy, the company initiated the open-
label trial at four sites in Australia and New
Zealand with a target enrollment of 12-15
patients. The primary efficacy endpoint is
the change in the coefficient of fat absorp-
tion (CFA) from baseline and measured at
the end of the open label treatment part of
the trial (Phase C) on standardized high-fat
meals and stool collection for 3 days (dye
marker). The company is evaluating four
escalating dose increments of MS1819, with
the aim of finding the optimal treatment
dose to be used in subsequent registration
trials in EPI patients associated with CP
and CF.
AzurRx BioPharma Pipeline
AzurRx BioPharmas other pipeline candi-
date is AZX1101 -- a recombinant-lactamase
combination of bacterial origin aimed at
prevention of hospital-acquired (nosoco-
mial) infections by resistant bacterial strains
induced by parenteral administration of
-lactam antibiotics as well as the prevention
of antibiotic associated diarrhea. The U.S.
Centers for Disease Control and Prevention
(CDC) has estimated that roughly 1.7 mil-
lion hospital-associated infections (~5% of
hospitalized patients) cause or contribute to
99,000 deaths per annum in the U.S., with
an annual cost of $4.5 11 billion. AZX1101
is in early preclinical testing and consists
of a combination of two -lactamases hav-
ing complementary activity spectrum. The
production processes of these two candidate
proteins have been optimized and would be
assessed for efficacy in minipigs. The animal
efficacy and toxicology studies for AZX1101
are slated to start in the summer of 2017.
www.azurrx.com n
The company paid consideration to SNN or its affiliates for this article.
MicroCap Review Magazine 31
 CANNABIS CORNER

The Global Proliferation of

Medical Cannabis

A fter an almost two-year bear market that followed a

bubble in early 2014, cannabis stocks delivered great
returns in 2016, with the 420 Investor Cannabis Stock Index
posting a gain of 88.8%.
As I mentioned in the last issue, the big-
gest driver of the stocks in 2017 is likely
to be potential changes in the federal poli-
cy towards enforcement of the Controlled
Substances Act. Under the Obama
Administration, states which complied with
the 8 tenets of the Cole Memorandum issued
in 2013 were permitted to operate state-reg-
ulated cannabis programs. With the Trump
victory, the executive order that served as
the foundation of the legal cannabis industry
suddenly looked like quicksand.
Indeed, federal policy has been the biggest
driver this year, with the sector peaking in
late February after extending the gains of
2016 but then retreating after an off-the-cuff
remark by Sean Spicer suggested a potential
change in how the Trump Administration

n ALAN BROCHSTEIN

32 MicroCap Review Magazine www.stocknewsnow.com

would handle cannabis. So far it has been
nothing but saber-rattling, but, through
June, the index was down 22.4% year-to-
date, falling to 57.19, which is still 81% above
the bear-market lows in February 2016 but
42% below the peak in February 2017.
Despite some concerns about changes in
federal policy that has weighed on investor
sentiment., the cannabis industry is enjoying
tremendous growth. Nevada made history
with its speed in opening sales up to adults,
with doors open to the public on July 1, less
than 7 months after voters gave the nod
to legalization. Nevada could develop into
one of the worlds most attractive cannabis
markets given its large tourist draw. There
are a few publicly-traded companies with
operations in Nevada. Several states are in
the process of rolling out medical cannabis
programs as well, and the growth outlook is
very positive for the industry, with cannabis
likely to compete increasingly with alcohol
and pharmaceuticals as news standardized
products are created that offer consumers
consistency in formats that extend beyond
smoking.
While I have been very cautious on can-
nabis stocks historically due to the sec-
tor being littered with hundreds of pump
and dump penny stocks, the quality has
improved dramatically. I mentioned the
first cannabis NYSE IPO, REIT Innovative
Industrial Properties (NYSE: IIPR), and
it has encouraged some other real-estate
focused companies to consider going public.
Institutional investors are very interested in
acting as landlords to cannabis cultivators.
We are also starting to see the emergence
of both public and private companies that
are creating multi-state cannabis operations.
Interestingly, two of the public companies,
Canadian Bioceutical Corporation (CSE:
BCC) (OTC: CBICF) and iAnthus Capital
Holdings (CSE: IAN) (OTC: ITHUF), are
based in Canada and have demonstrated
great access to capital. Finally, and perhaps
most importantly, there is an increasing
number of companies that are on track to
generate annual revenue in excess of $10mm,
www.stocknewsnow.com
Canada remains on track to fully legalize cannabis
in 2018, and its medical cannabis program has been
seeing explosive growth in patient enrollment.
including both direct cannabis companies as
well as those that serve cultivators, proces-
sors and retailers.
While the U.S. cannabis industry advances
despite the overhang of Jeff Sessions, whats
going on beyond our borders is truly amaz-
ing. Canada remains on track to fully legal-
ize cannabis in 2018, and its medical can-
nabis program has been seeing explosive
growth in patient enrollment. There are
now 19 publicly-traded licensed producers
(LPs), several of which trade on the Toronto
Stock Exchange. Our neighbor to the South,
Mexico, has also decided to legalize medi-
cal cannabis, but the initial program will be
highly restrictive. Several South American
countries are in the process of rolling out
their own programs too. A handful of coun-
tries in Europe are adopting medical canna-
bis, but the most significant one is Germany,
which will soon issue licenses for produc-
tion but is already allowing imports. This
market will be tremendous based upon the
large population, the insurance coverage
and distribution through pharmacies, and
several Canadian LPs are expected to play a
major role in the market. Finally, Australia is
another rapidly developing medical cannabis
market that has seen several companies go
public, the two largest of which have leading
publicly-traded Canadian LPs as investors.
2016 was a great year for speculators in the
cannabis sector, but 2017 looks to be the year
that long-term investors can finally consider
participating, though the market remains
highly speculative. The rough first half for
the index masks some big improvement in
the industry fundamentals and the emer-
gence of higher-quality companies. Those
who are interested in capitalizing on legaliza-
tion would be wise to focus on some of the
revenue-generating companies, especially
those with good access to capital and with
profitability or near-profitability in their
operations. With all of the positive develop-
ments beyond our borders, those interested
in the sector should also pay attention to
companies able to capitalize on these oppor-
tunities, especially in Canada and Germany.
The Big 4 in Canada, Aphria (TSX: APH)
(OTC: APHQF), Aurora Cannabis (TSXV:
ACB) (OTC: ACBFF), Canopy Growth (TSX:
WEED) (OTC: TWMJF) and MedReleaf
(TSX: LEAF) (OTC: MEDFF) are all particu-
larly well positioned and have pulled back as
the sector has consolidated big gains. The
combined market cap of these companies
is about $3.8 billion, and they trade very
liquidly. n
Alan Brochstein, CFA, began his career as a bond
trader in NYC in 1986 with Kidder, Peabody and
worked with CS First Boston and Criterion invest-
ments until transitioning to equities as a analyst/
portfolio manager in 2000. In 2007, he began AB
Analytical Services, where he provided research and
consulting to several investment advisors while also
becoming one of the most popular contributors at
Seeking Alpha. In 2013, Alan launched 420 Investor,
an online community focused on publicly-traded
companies in the cannabis sector, and, more recently,
he began New Cannabis Ventures, a news & infor-
mation platform that highlights the most promising
companies and influential investors in the cannabis
industry.
I have no ownership in any of the companies
mentioned. Aurora Cannabis, Canadian Bioceutical
Corporation, Canopy Growth and iAnthus are adver-
tising clients at New Cannabis Ventures.
www.420investor.com
MicroCap Review Magazine 33
 FEATURED ARTICLE

Cannabis Investing
What Looks Interesting
W hile the cannabis industry has enjoyed robust growth to date
(According to the New Federalism Fund, the state-legal cannabis
industry employs more than 100,000 people, generated $7 billion in 2016
sales, and by 2020, will support more than a quarter-million jobs. and grow
to $20-25 billion not including the fully legalized sale), the nuances of the
100s of different cannabinoids and their corresponding effects and varied
state regulations, are hard to predict and unlike biotech, the catalysts that
drive valuation are harder to time.
Opioid crisis in the US has led to higher There is no FDA approved plant-derived
hopes for medical marijuana as a substitute, cannabis based drug right now, but GW phar-
especially in cancer-related pain. The recent ma has by far the most advanced cannabis
declaration of national emergency empowers based therapeutics. GW Pharmas Epidiolex
the Trump administration to direct funds (oral plant based CBD) is expected for FDA
towards more research for non-opioid pain- approval in 2018 for rare and severe forms of
killers. More than 100M US adults suffer epilepsy. Not all companies have the financial
from some form of acute or chronic pain.1 resources like GW to spend $165M- $175M
Non-addictive, effective painkillers would a year in R/D, regulatory, manufacturing
give doctors a safer option for patients. The and commercial preparations for Epidiolex.
strong safety profile of cannabis products Other companies actively pursuing clini-
has been established though recreational cal advances include INSYS Therapeutics
and medical use as well as through research.2 (INSY), Zynerba Pharmaceuticals (ZYNE),
Longer term opportunity in cannabis lies in InMed Pharmaceuticals (IMLFF), Therapix
its therapeutic and pharmaceutical applica- Biosciences (TRPX), Axim Biotechnologies
tions. With anticipated DEA re-schedul- (AXIM), Nemus Bioscience (NMUS), and
ing and FDA approvals, medical marijuana Intec Pharma (NTEC) at various stages of
could steadily increase market share while development.
decreasing opiate deaths. While GW still faces approval, capac-
ity and reimbursement risks, GWs drug is
1
Johannes CB et al. The prevalence of chronic pain nonetheless the most clinically advanced,
in United States adults: results of an Internet-based
and it is assumed that it will be the first can-
survey.J Pain2010;11:1230-1239
2 nabis drug to be FDA approved. It is also
n BY DR. LAUREN CHUNG Ware MA et al. Cannabis for the Management of
Pain: Assessment of Safety Study (COMPASS). J Pain assumed that the DEA schedule will change
2015:16:1233-1242.

34 MicroCap Review Magazine www.stocknewsnow.com

with approval. FDA approval is the only way
the drug could ensure consistent dosing,
potency, and availability across the country.
With scheduling change however, it is pos-
sible for all medical use of cannabis undergo
FDA approval (albeit potentially via a less
rigorous 505(b)(2) pathway), in which case,
at a drastic level, medical dispensaries are at
risk of closing. Though licenses are continu-
ing to be granted now, the ultimate demise
of medical dispensaries upon FDA approval
of one or more cannabis drugs remains to
be seen.
Invest in Canada
Canadians have a constitutional right to
medical cannabis, and are less likely to be
impacted by the scheduling changes in the
US. As such, medical marijuana seems to
be protected in Canada. Also, the laws in
Canada are more straight forward, ie, a draft
guidance of legalization has been released
and full enactment is expected mid2018.
While currently medical marijuana cannot
make any claims, in the long run, it is pos-
sible for Health Canada to approve certain
claims. In the meantime, it is important for
the sponsors to commit to physician educa-
tion. Meaning, further genetic testing could
potentially expand the market more broadly,
but in practical sense, hundreds of formu-
lations linked to different symptoms may
not be adopted if the physicians prescrib-
ing them are not aware or convinced. This
problem is already faced in the recreational
business; Stores with too many choices are
confusing for consumers.
One risk of Canadian companies is that
their business model is the same. Companies
that are focusing on physician education
may have more staying power and defensible
brand. In addition, companies that have
expansion overseas may have better com-
petitive advantage, ie companies with finish
fill facilities overseas may have endorsement
of the govt of the country they are in espe-
cially if they are also providing employment
in those countries.
www.stocknewsnow.com
Canadians have a constitutional right to medical
cannabis, and are less likely to be impacted by the
scheduling changes in the US. As such, medical
marijuana seems to be protected in Canada.
By contrast, the US market is vastly frag-
mented even though we have a much larger
population. Considering the projected price
drop of cannabis plant, vertically integrated
cannabis businesses are key. Also, any busi-
nesses that counter the price drop by cost
savings make agricultural technology very
interesting: Increasing efficiency, reduce
electrical use, reduce labor costs by automa-
tion, and reduce capex spending by increase
in growing efficiency, ie more harvesting
time per year (or yield per year) without
losing terpene development. As such, what
would be archaic going forward would be for
a need to build massive acres of grow houses.
Because aggregate of these considerations is
vast, one way to efficiently invest in the can-
nabis business in the US is via funds such
as MedMen, or an investment vehicle such
as iAnthus Capital (ITHUF), that directly
invests in legal cannabis industry upon rig-
orous due diligence.
Other area of interest is cannabis diag-
nostics. As more cannabis drugs move into
the clinic, and states legalize cannabis use,
cannabis safety and testing will become
increasingly important, and players in this
area include privately held Steep Hill, SC
labs, and a start-up CeresLabs, and publicly
traded Digipath (DIGP), CannLabs (CANL),
and Pazoo (PZOO). In addition, life sci-
ences tools companies such as Shimadzu
(TYO) and Sciex could represent a good
opportunity in equipment sales. Lab testing
guidelines and protocols are evolving, and as
more regulations come onboard, diagnostics
will be mandated and more testing would be
required.
Where does this leave for hemp based
CBD companies? The likes of Charlottes
Webb, and ETST? A lot of them just white
label their own brands, and the extracts
are purchased. These opportunities are too
thinly spread, and if there are contractions
in the space, the ones with strong brand
staying power will survive but largely uncer-
tain. n
Dr. Lauren Chung
Managing Director, Healthcare Research
Dr. Lauren Chung serves as a Managing Director in
Healthcare Research, and has more than 16 years of
equity research and investment management experi-
ence in the biotechnology and healthcare space.
Prior to joining WestPark Capital, Dr. Chung
served as a Senior Equity Analyst at Maxim Group
focused on healthcare companies. Previously, Dr.
Chung provided consulting services related to
healthcare investments and various strategic and
operational planning for healthcare companies and
investment firms.
Dr. Chung was a Co-Founder and Chief Operating
Officer of Tokum Capital Management, a healthcare
fund, which merged with Perella Weinberg Partners.
Prior to that, Dr. Chung was a Healthcare Portfolio
Manager and Analyst at RBR Capital, Kingdon
Capital, and Pequot Capital.
Contact Lauren:
lchung@wpcapital.com
(929) 387-3605
WestPark Capital, Inc. is a full service investment
banking and securities brokerage firm which serves
the needs of both private and public companies
worldwide, as well as individual and institutional
investors. We are committed to forging lasting part-
nerships with emerging growth companies and the
investors who back them. Our simple approach is to
provide customized financial solutions for virtually
any need. A complete range of investment banking
and brokerage services are available to our valued
corporate and individual clients.
www.wpcapital.com
MicroCap Review Magazine 35
 F E AT U R E D A R T I C L E
The Art of Value Investing
Excerpt from my interview with Sanjay Bakshi, Professor and Value Investor
From Episode 41 of the Planet MicroCap Podcast
T
o date, my interview with Professor
Bakshi has been the most down-
loaded and listened to Planet
MicroCap Podcast episode. I think this is
due to his huge popularity within the value
investing community, as well as the wisdom
he conveys within this interview, which are
pearls that Ill carry with me for the rest of
my investing career. The interview is approx-
imately 108 minutes long, and I thought I
would share some of my favorite answers
Professor Bakshi provided.
Here is an excerpt from our interview,
where we discuss how Professor Bakshi
defines Value Investing and what it means
to him:
n BY ROBERT BOBBY KRAFT
36 MicroCap Review Magazine
Robert Kraft: How would you define value
investing? What does it mean to you?
Professor Sanjay Bakshi: Well, its meant
different things to me at different points of
time. And I think it means different things
to different people, and thats okay by the
way for me. I mean, to me, it has meant dif-
ferent things over time. EarlierI started my
career as a Graham and Dodd investor - I
was telling you that I read that essay on spe-
cial situations and I came back to India and
started my career building a track record
in special situations and then I gradually
transitioned into becoming a classic Graham
and Dodd investor when I was buying stocks
below liquidation value, below cash value,
below net networking capital something
that we all know, its called Net-Nets.
And of course buying businesses at low
P/E multiples or high earnings yield as
Graham used to call them, and of course that
kind of investing required wide diversifica-
tion and there wasnt much emphasis on the
quality of the business or the management.
In fact, Graham used to say that I dont even
need to know the name of the company; if I
had the financial statements I will tell you if
it is cheap or not. I mean the primary source
of marginal safety was coming from a low
price point. So, initially the whole of value
investing to me was that its something that is
cheap, you are buying something that is fun-
damentally cheap; that is ridiculously cheap
and selling below liquidation value or below
cash value or at a very low P/E multiple then
you should buy that business.
But that definition changed over time -
now it means that I would like to buy into
a business whos value will grow over time,
so that the expected return of holding it
over the long term, which is a minimum
five year, but usually 10 years or even higher
will be more than satisfactory. Now I think,
over the years, I also started appreciating the
distinction between the value investing and
value traps.
Value investing is more than buying some-
thing cheap. I mean, the universal stocks that
are cheap is much larger than the universal
stocks that are cheap, but will not be cheap
over the long term. Not everything that
cheap will become fairly valued and a lot of
value investors, some of my students many
of my students are actually unable to make
that distinction because they read Graham
and Dodd and think that if it is selling below
cash, maybe I should buy it. But maybe
its selling below cash for a reason and its
probably a good reason. I mean, maybe the
management is crooked and they dont want
to share the proceeds of the business with
you and they control the company or the
business is controlled by a family who thinks
more about its own interest than about the
minority stockholders, so thats like a value
trap because there is no possibility of the
unlocking of value.
So I think its important to distinguish
between what is cheap and what is likely
to remain cheap or rather think in terms
of probability that what will cause the gap
between value and price to narrow and
sometimes the probability of that happening
is remote and I think those are situations,
which we will classify as value traps.
I encourage you all to listen to the episode
in full here:
www.planetmicrocap.podbean.com n
www.stocknewsnow.com
www.stocknewsnow.com MicroCap Review Magazine 37
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 OPINION
Partnering with a Transfer Agent
T ransfer agents have been involved with
public and private companies for over
100 years in the U.S. The role of a transfer
agent has evolved significantly with most dra-
matic changes over the past 15 years. Banks
emerged as the first transfer agent of note
to support issuer stockholder recordkeep-
ing when the New York Stock Exchange was
formed. Today, virtually all U.S. bank transfer
agents have either exited the industry or have
been acquired by non-bank agents.
Continental Stock Transfer & Trust
Company, a New York state charted trust
company, is currently the 4th largest transfer
agent serving over 1,000 clients and 2 mil-
lion shareholders since 1964. Transfer agents
are responsible for maintaining the public or
private companys stock or bond transactions.
Transfer agents are highly regulated by the
SEC and comply with various government
regulations including those of the IRS and
treasury foreign asset control laws. When part-
nering with a transfer agent, the issuer gains
expertise on compliance and governance, and
peace of mind that your agent will continu-
ally review and comply with new regulations
and requirements. They interact with brokers
and financial institutions, including DTCC, to
coordinate share movement for listed issuers
or with the shareholder directly to manage
registrations in certificate or book-entry form.
For companies that trade on an exchange,
the role of The Depository Trust & Clearing
Corporation DTCC is important to sup-
port electronic movement of shares. For
over 40 years, DTCC has provided services
to support the U.S. post trade transactions by
n BY STEVEN NELSON
www.stocknewsnow.com
providing settlement and clearing services
to the financial markets. Continental Stock
Transfer interacts with DTCC as a regis-
tered FAST agent to offer direct registration
DRS service, a non-certificated transmis-
sion of shares to and from brokers. With
the entire industry moving to a 2 day trade
settlement T+2 effective 9/5/2017, it is
critical you have a partner that is prepared to
manage shareholder transactions efficiently,
accurately and timely.
Continental was founded on a specific
vision to support private, emerging and
mid-size shareholder base companies with a
suite of tailored services. Our product solu-
tions include:
IPO/SPAC Offerings
Bank Conversion IPO Offerings
Subscription Services
Escrow/Custodian Services
Reg A+ Services
Reverse Mergers
Crowdfunding Solutions
Post-Bankruptcy Emergence
Public to Private Transactions
Tender/M&Q/Exchange Agency
Dividend Disbursement
DTCC FAST, DWAC, DRS
Restricted Stock/Legal Transactions
Escheatment/Post Merger Services
Investment/Employee Plan Administration
Proxy/Annual Meeting Services
Robust licensed technology
Shareholder Care Center
Global Partnerships / Co-Agent & Dual
Agent Services
Client & Shareholder online web-based
transactional portal platforms
With Continental Stock Transfer & Trust
Company, you will have the following cre-
dentials behind the transfer agent rela-
tionship to ensure your company and its
shareholders are represented and excellently
cared for every day.
SEC Registered Transfer Agent
25M Blanket Bond
New York State Chartered Trust Company
SEC No-Action Letter for Escrow Services
Industry change risk management and com-
pliance
Whether you are growing or reducing your
shareholder base, or managing a significant
corporate action or event, a trusted transfer
agent partnership will provide day to day
guidance and operational support to allow
you to focus on building your business. n
continentAl stock
trAnsFer & trust coMPAny
Continental Stock Transfer & Trust is one of the 4th
largest transfer agent in North America, handling more
than 1,000 public & private issues and aggregating more
than 2 million shareholders. For 53 years the Company
has delivered to its clients reliability, stability and pre-
mier service at an exceptional price. Continental offers
a wide array of services, including public and private
offering administration, issuance and transfer of shares,
management of restricted transfers and option exercis-
es, maintenance of shareholder stock ledgers, dividend
disbursement and investment plan services, as well as
corporate event administration and escrow services. In
addition, the Company has a dominant position in the
Special Purpose Acquisition Company SPAC / IPO
business and has been routinely recognized as the lead-
ing North American Transfer Agent, delivering excep-
tional services and unmatched value to its customers.
Learn more atwww.continentalstock.com
Karri L. Van Dell, Vice President
Director of Sales & Marketing
kvandell@continentalstock.com
Business Direct: 212.845.3224
Steven Nelson, President & Chairman
With more than 30 years of industry experience,
Steven is heavily involved in Continental Stock
Transfer & Trusts day-to-day organizational and
administrative issues, and in the overall management
of client initiatives. An attorney with a background
in public as well as private practice, he is a member
of the New York State and Federal Bars. He has prac-
ticed at Simpson Thacher & Bartlett, and as a fed-
eral prosecutor. Steven is a member of the Securities
Transfer Association Board, and chairs its Legal
Committee, which is active in promoting important
changes within the industry. A magna cum laude
graduate of Brandeis University, he received Law
Review honors from NYU Law School.
MicroCap Review Magazine 39
 F E AT U R E D A RT I C L E
A Massive $Trillion Industry
is Born Commentary and Insights
A MAssiVe $trillion
industry is born
It began with the exhaust from the
internal combustion engine.
Recognition of the air pollution cre-
ated by the exhaust.
Public policy to curtail the air pol-
lution
The evolving technology to develop
Mired in air- the new-age electric motor and bat-
tery to store the power to drive the
pollution - vehicle / EV.
Harnessing the minerals necessary to
the44-story CCTV create the new-age EV battery pack.
And going forward, the massive multi-
Headquartersin billion dollar effort already underway
to build the EV, replace the gas pow-
Beijing, China ered engine and develop the supply
chain of the raw materials necessary
with its innumerable ramifications.
The opportunity to find the winners of
this play-out lives in the supply chain that
will furnish and supply the raw materials of;
copper, lithium, cobalt, vanadium, nickel
and spherical graphite.
The Problem in More Detail:
Whats now accepted is that air pollution
is the worlds largest single environmen-
tal health risk. The pollution kills 3 mil-
lion a year, according to the World Health
Organization last year.
Air pollution in Chinese cities ranks
among the worst on the planet and less than
1 % of Chinas top 500 cities meet the air
quality standards set by the World Health
n BY DR. JOHN L. FAESSEL
Organization. The problem is nearly every-
40 MicroCap Review Magazine
where, especially in the worlds large urban
centers.
Governments worldwide have awoken to
the issue and are now attacking the problem
with tough emission standards and even by
banning diesel-powered vehicles.
The Solution
The play-out here for society at large is the
development and evolution of the electric
vehicle, or EVand even more critically, the
progress in battery technology toward an
increased capacity battery pack thats stable,
safe, and efficient.
And, it isnt just Tesla: VW, BMW, Daimler-
Chrysler and Ford are building huge gigafacto-
ries that produce the next-generation batteries
and some of these are over 2X times more pow-
erful than what Tesla currently has on the road.
Copper, quite simply, is king
when it comes to realizing a post-
gasoline world.
The conventional internal-combustion-
engined car of today contains about 45
pounds of copper. The average pure battery-
powered EV requires about 175 pounds. The
expansion of EVs will require 120-million
tons of copper a year. Big picture, the mining
industry is producing only about 16% of the
copper required to meet projected demand.
China is the worlds largest consumer of
copper, with almost half of it going into power
generation and the rest into appliances, trans-
port, construction and electronics.
Bottom line: the mining industry of
today is not even close to finding or min-
ing enough copper to provide the metal for
the oncoming market demand.
www.stocknewsnow.com
Cordoba Minerals Corp. (CDBMF) on
OTC - (CDB) on the Vancouver exchange
- Market-Cap $46 million. http://www.cor-
dobamineralscorp.com/
A mini-cap company I like in the cop-
per space is Cordoba Minerals in Columbia.
Billionaire mining mogul Robert Friedland*
through his privately owned company HPX,
has just recently strengthened his posi-
tion in Cordoba to 69%. The interest from
Friedland / HPX stems from a bonanza grade
copper 10.25% copper / gold 4,440 g/t gold
intersection. [Hole ACD036] The find has
a strike length of 1.3 kilometers, to widths
of up to 400 meters and extends from the
surface to 260 meters below surface.
Cobalt
In reality the lithium ion battery is a cobalt,
nickel battery in all but name.
The dominant and necessary chemistries
for the next-generation EV battery are lithi-
um, cobalt and nickel. Weve all heard about
lithium and true, its necessary. However, the
far, far more essential elements are cobalt
and nickel salts. These salts make up around
15% of the batterylithium only 5%.
When combined with Clean TeQs pro-
prietary ion exchange extraction and puri-
fication processing technology Clean TeQ
becomes one of the largest and lowest cost
www.stocknewsnow.com
suppliers of cathode materials in the EV bat-
tery pack market.
Since 2010, China has spent well over $6
billion acquiring interests in cobalt mining
ventures and now control over 60% of the
worlds refined cobalt production.
Clean TeQ Holdings LTD
(CTEQF) on the OTC and (CLQ) on AX
[Australia] http://www.cleanteq.com/com-
pany/
Conspicuously, Chinas Pengxin
International Mining Co. Ltd. recently
acquired 16.2% of Clean TeQ for $81 million.
Here again Robert Friedland* is a Director
and the major shareholder of Clean TeQ and
recently acquired an additional 1.99 million
shares on top of his previous 16.2% interest
in three recently reported insider-buys in the
open market (May / June 2017.)
The cobalt / nickel deposit in New South
Wales, Australia, contains one of the highest
grade and largest cobalt and nickel depos-
its outside of Africa (and the worlds larg-
est and highest grade scandium resource.)
Over 1,300 core holes have been drilled in
the near-surface deposit to delineate the
resources size and grade. And its amendable
to simple strip mining by excavators.
Who will be the eventual winners of the
most popular and most profitable EV manu-
facture may take decades to determine; think
the oil / gasoline business vs the hundreds of
auto makers that have fallen by the wayside.
* In 2016 Friedland was inducted into the
Canadian Mining Hall of Fame and this year
was the recipient of The Northern Miners
Lifetime Achievement Award (link; https://
insider.kitco.com/lifetime-achievement-
award-presentation-fireside-chat-robert-
friedland/ ). Currently Friedland (Ivanhoe
Mines) sits on three of the largest mineral
finds ever: perhaps the largest and richest
copper, perhaps the largest and richest zinc
find, and perhaps the largest and richest
platinum find. Plus he has size interests in
several other mining ventures, notably Clean
TeQ and Cordoba.
I bought shares of Clean TeQ and Cordoba
in the open market.
www.onthemar.wordpress.com n
Dr. John L. Faessel is a seasoned and respected
Wall Street professional with industry-wide recogni-
tion for expertise in market strategy and analysis.
He is widely recognized for his insights in pub-
lic companies. For over 25-years Dr. Faessels ON
THE MARKET reports have been widely distributed
throughout the world to an extensive list of financial
institutions, brokers, mutual funds, hedge funds and
high net worth investors. Contact: onthemar@san.
rr.com
MicroCap Review Magazine 41
 PROFILED COMPANY otc MArkets: cteQF, Asx: clQ

clean teQ holdings limited

cobalt, nickel and scandium: key raw
Materials for technology disruption

C
lean TeQ Holdings Limited All key permitting on the Project has been
(CLQ:ASX; CTEQF:OTCQX) is the completed, including approval of the com-
100% owner of the Syerston Cobalt- panys Environmental Impact Statement, a
Nickel-Scandium Project in Australia. secured water allocation and an approved
Syerstons unique mineral resource positions Development Consent. Syerston is devel-
Clean TeQ to become one of the largest and opment ready and will be the first mine
lowest cost suppliers of cathode raw materi- developed to exclusively produce high-purity
als to the lithium-ion battery industry. cobalt and nickel sulphate to supply the
Figure 1: Project Location
Founded in 1990, Clean TeQ has a track lithium-ion battery market (Figure 2 below).
record of innovation in clean technologies Clean TeQ is backed by its largest share-
spanning over 25 years. Clean TeQs Clean- tonnes in higher grade peripheral zones). holder, Mr Robert Friedland, one of the most
iX continuous ion exchange hydrometal- The Project comprises an exploration respected and successful project developers
lurgical process provides highly efficient license and several mining lease applications in the mining industry and a serial investor
extraction and purification for a range of granted under the NSW Mining Act, which in disruptive technologies. The company
valuable strategic metals from slurries and overlay the project area. In addition, Clean also has significant support from China, with
solutions. The company focuses on metals TeQ owns (or has options to acquire) most of Shanghai Pengxin Mining recently investing
that are highly geared to disruptive changes the freehold title that underlies the Project. AUD81M to acquire a 16% interest in the
in technologies and markets, particularly in
global energy and transport.
Clean TeQ acquired the Syerston Project
in 2014. The Project, located near the town-
ship of Fifield, is based in one of Australias
most established mining jurisdictions,
approximately 350 km north-west of Sydney.
It is well serviced by infrastructure, with
road, rail and power services readily avail-
able. The Fifield District is noted for its
intense magnetic anomalism and significant
occurrences of minerals containing nickel,
cobalt, scandium and platinum.
Syerston is uniquely positioned as one of
the largest and highest-grade cobalt resourc-
es outside Africa. The mineral resource
totals 109 million tonnes grading 0.65%
nickel and 0.10% cobalt for contained metal
of 700,000 tonnes nickel 114,000 tonnes
cobalt. It also hosts almost 9,000 tonnes of
scandium oxide (in addition to the 18,000 Figure 2: Clean TeQs nickel sulphate (top) and cobalt sulphate samples

42 MicroCap Review Magazine www.stocknewsnow.com


Figure 3: Barren and Ni/Co-loaded resins
company. The management team is led by
Mr Sam Riggall, an experienced executive
who has held senior management roles at
Rio Tinto and Ivanhoe Mines.
A Definitive Feasibility Study (DFS) is
currently underway, due for completion in
Q4, 2017. Clean TeQ completed a pre-fea-
sibility study (PFS) in October 2016 which
assessed the economics of a 39-year min-
ing operation, processing 2.5Mtpa of ore.
With 18,000tpa of nickel and 3,200tpa of
cobalt production, combined with a C1 cash
cost of US$0.89/lb Ni after cobalt credits,
the Project demonstrates strong economics,
with a post-tax NPV8 of US$891M and an
IRR of 25%. Capital cost was estimated at
US$680M. (see ASX Release of 5 October
2016 for more details on the financial evalu-
ation). The economic model in the PFS did
not attribute any value to scandium produc-
tion.
As the global automotive industry stands
on the edge of a technology and energy
revolution, cobalt and nickel are critical raw
materials in the production of cathodes for
the lithium-ion battery market. These met-
als make up between 70% and 80% of the
cost of producing the battery cathode. The
global battery industry already consumes
www.stocknewsnow.com
approximately 50 per cent of global cobalt
supply, with demand expected to soar as the
world switches from internal combustion
engines to electric drivetrains. Two-thirds of
mined global cobalt supply comes from the
Democratic Republic of Congo.
Importantly, the battery industry cannot
use cobalt or nickel metal to manufacture
battery cathode. The products must be
supplied in the form of metal salts, usu-
ally hydrated metal sulphates (CoSO4.7H2O
and NiSO4.6H2O). The key to Clean TeQs
Clean-iX process is that it produces these
metal salts in the primary extraction phase
of processing, thereby saving significant re-
handling and reprocessing costs. It does this
by selectively loading nickel and cobalt on
to apolymer ion exchange resin, and then
stripping the metals in the form of a sulphate
(Figure 3).
The demand for lithium-ion batteries is
anticipated to grow strongly over the next
decade as production of electric vehicles
increases and batteries become an important
component in utility-scale energy storage
systems. Syerstons high cobalt grades,
combined with Clean TeQs proprietary ion
exchange technology to produce the spe-
cific high purity cobalt and nickel sulphates
required by lithium-ion cell manufactur-
ers, positions the Company to benefit from
strong forecast growth in demand for lithi-
um batteries.
The Company has entered into a small
number of non-binding Memoranda of
Understanding (MoU) for offtake of cobalt
and nickel sulphate representing a propor-
tion of Syerstons anticipated production
over the first five years of the mine. These
are with counterparties who are well estab-
lished in the lithium-ion battery supply
chain. The MoUs define certain key terms
of the offtake contracts including volumes
and pricing structure.
The Syerston resource also hosts a globally
significant resource of scandium. This rare
metal is widely regarded as the most effective
alloying element that exists for aluminum,
improving strength, corrosion-resistance
and weldability. However, due to its scarcity,
scandium has rarely been adopted for large-
scale industrial applications.
Global scandium oxide production is lim-
ited to only 10-15 tonnes per annum. The
absence of reliable and secure long-term
production, combined with a high and vola-
tile price, has constrained the use of scan-
dium to niche applications. The Syerston
Project has the potential to produce up to
170tpa scandium oxide as by-product from
cobalt and nickel production, for very low
incremental capital and operating cost. This
represents strong potential for significant
economic upside in the Project.
For more information about Clean TeQ
please visit the Companys website:
www.cleanteq.com. n
The company paid consideration to SNN or its affiliates for this article.
MicroCap Review Magazine 43
 PROFILED COMPANY
Finjan holdings, inc.
cybersecurity for the Modern era
introduction
Finjan Holdings, Inc. (NASDAQ: FNJN) is
a cybersecurity technology company with
a rich 20-year history. Back in the mid-
1990s the company pioneered behavior-
based threat detection as well as various
other dynamic real-time web and network
security concepts that are very prevalent in
the cybersecurity market today.
The company was founded by serial entre-
preneur, Shlomo Touboul who entered a
competition hosted by Sun Microsystems
to help them create programs for Java, a
software technology to deliver content and
information over networks and the inter-
net. Instead of focusing on new programs,
Shlomo discovered that on the back-end
there were many holes which would require
a new type of security for protection. Out
From L to R. Michael Noonan(CFO), Julie Mar-Spinola, (CIPO),Phil Hartstein, (CEO)
44 MicroCap Review Magazine
nAsdAQ cM: FnJn
of this Finjan was formed in 1996 in Israel
to innovate behavior-based threat detection
focused on proactively detecting risks by
identifying patterns and behaviors of mali-
cious content. The name Finjan is derived
from the word used in the Middle East to
describe a vessel or small cup that contains
or protects the coffee - or java. Shlomo
believed the name was appropriate because
the idea for the company and the associated
technology came from his realization that
with the introduction of the Java program-
ming language, the existing security software
would not be able to contain or protect
against the possible threats to a computer
using Java. Finjan relocated its headquarters
in San Jose in 1997 and provided software
web solutions and hardware to the enterprise
market and, importantly, patented its land-
mark technology.
www.stocknewsnow.com

In 2005, the online security industry
began moving towards real-time, behavior-
based, proactive threat detection, at times
in violation of Finjans patent rights. In the
same year, the Company completed its first
license with Microsoft.As a result of its suc-
cessful licensing program, Finjan sold-off its
hardware and software divisions and kept
its global patent portfolio which contains
more than 50 issued and pending patents
and is organically derived through the com-
panys internal research and development
investments. The company remains active in
pursuing the licensing of it patents and has
generated over $250 million in licensing fees
to date. Finjan stands behind and encour-
ages innovation and as such, the company
is flexible on how it works with prospec-
tive licensees to ensure together, parties can
arrive at a fair value license. These patents
have been and remain the foundation for
Finjans technology and protecting its inno-
vation will always be a key strategic objective
for the company.
www.stocknewsnow.com
Multiple Paths Towards
Future Growth
Over the last two years, security software
and hardware segments of the cybersecu-
rity industry are reaching a tipping point
of maturity and the market is undergoing a
faster pace of consolidation than ever before.
With this evolving and changing landscape
Finjan continues to evaluate new ideas and
opportunities for expanding our current
programs and potentially starting new ones.
The last two years have been instrumental
for the company as it returned to the mar-
ket with emerging businesses to spread its
thought leadership through its Consulting
arm, CybeRiskTM and to bring its technology
back to market through its subsidiary Finjan
MobileTM.
Finjans subsidiary, CybeRisk, was formed
to help address the growing need for enter-
prise security worldwide. CybeRisk partners
with its clients and helps to identify current
risks and mitigate future issues and dif-
ferentiates itself but connecting the server
room with the board room, recognizing that
enterprise security is absolutely a high-level
issue. These cyber-attacks not only threaten
a companys employees and stakeholders, it
can leave a huge financial burden, impact
the companys brand, reputation and cause
irrevocable damage. CybeRisk is important
to Finjan as it allows the company to spread
its 20-year know-how in cybersecurity to
help enterprises mitigate future risk.
In its effort to offer the market its enter-
prise-grade technology, Finjan has formed
another subsidiary, Finjan Mobile. Given
the uptrend in mobile device usage coupled
with the amount of transient corporate data,
the average mobile user presents and rep-
resents higher risks of data loss through
hacking. This return to product develop-
ment was meaningful for Finjan as earlier in
2015, Finjan was bound to a non-compete
and confidentiality due to the sell-off of its
hardware business. Once this non-compete
expired, Finjan moved quickly and decisively
into the development of mobile applica-
tions for the consumer using its innovative
patented technology which it continues to
build upon.
The goal with the first product, The
FinjanMobile Secure Browser, was that it
be simple to access and easy to use as it
protects your mobile device from malicious
content from the Internet. More importantly,
unlike most mobile applications, the Secure
Browser is intended to bring transparency to
users who search for anything on the internet
with the promise of not collecting user data
your data. Since the initial launch back in
June of 2015, Finjan has listened to customer
feedback and released several updates and
new generations of the application.
In June of 2017, Finjan launched
VitalSecurity Gen 3.7 built off Finjans pat-
ented technology and highlighting the ability
to block trackers associated with Advertising,
Analytics, Content and Social. This new and
improved offering provides passcode access,
menu bars, browsing history and detailed
virus information to educate users on poten-
tially malicious sites. Customer interest con-
MicroCap Review Magazine 45

Finjans subscription service is easy to use and
priced affordably and can be used amongst many
devices.
tinues to grow with more than 165,000
downloads to date.
While all of the mobile development
has been internally focused to-date, the
Company does not lose sight of the fact
that to grow more rapidly it must consider
go-to-market partnerships and acquisition
candidates.
As such, in April of 2017, Finjan signed
a go-to-market partnership with Avira,
a German multinational security soft-
ware company that provides antivirus soft-
ware, Internet Security, Privacy, Identity and
Performance tools for computers, smart-
phones, servers and networks, delivered as
both software and cloud-based services.
Avira will provide Finjan with its Virtual
Private Network (VPN) Platform for dis-
tribution and sale by Finjan Mobile as part
of Finjans VitalSecurity suite of product
offerings. The companies also entered into
a confidential cross-license under their
respective patents. Finjans partnership with
Avira sets us up for VitalSecurity Gen4 in
which Finjan will design Aviras VPN into
its next browser to offer enhanced mobile
security and protection for its customers.
Many may ask why is VPN suddenly gain-
ing so much traction? Attackers could be
intercepting mobile phone data without con-
sumers knowledge, and advertisers and ISPs
are absolutely engaged in similar activities.
With Gen 4 VitalSecurity, VPN users are
protected against multiple threats. Finjans
subscription service is easy to use and priced
affordably and can be used amongst many
devices. While there are mobile browsers
and standalone VPN apps available in in the
Apple and Google Play Stores VitalSecurity
combines these features so the users can
enable/disable VPN while browsing the
46 MicroCap Review Magazine
internet. Finjan expects to launch/launched
this in September of this year with revenue
generation for the VPN enabled browser
shortly thereafter. Over time, Finjans goal is
to offer a premium suite of mobile security
products to the consumer and ultimately
move into enterprises.
Finjans 20-year history in cybersecurity,
has enabled the company to gain a unique
perspective on the industry and almost
watch in slow motion as the market has
consolidated and transitioned and Finjans
choice to move its enterprise-grade tech-
nology into the hands of the consumer
was very deliberate and to-date has proven
to be a desirable offering and as risks to
mobile security grows, the attractiveness
of Finjans top-of-the-line security offerings
will become even more attractive.
recent FinAncinGs hAVe
bolstered strenGth
When Finjan went public in November of
2013, it self funded with its own money to
start operations. Given the company had
not done any formal pubic raise, it has
taken recent momentum as an opportunity
to strengthen its balance sheet over the last
year. In May of 2016, the company did
its first financing with Halcyon and Soryn
to raise $10 million in preferred shares.
Impressively, Finjan redeemed and retired
these shares in less than one year and turned
around to do another financing with the
same partners for another $15 million in
June of 2017. Halcyon and Soryn not only
appreciate the complexities of Finjans busi-
ness, but were able to see through the risks
and recognize all that Finjan has achieved.
Separately, Finjan engaged in an under-
written registered public offering of its com-
mon stock in which the company achieved
gross proceeds of $11.3 million. These events
offer renewed confidence in Finjan, its his-
torical licensing and enforcement results,
emerging business momentum and ulti-
mately its long-term staying power. In 2016,
Finjan returned to profitability for the first
time as a public company. The companys
momentum has carried into the first half
of 2017 as with a record first quarter, the
company is on track to achieve profitability
again for the full year. Finjan has officially
achieved its inflection point after several
years of building and executing on our stra-
tegic objectives which include vigorously
protecting Finjans IP and successfully rein-
troducing its technology and new products
into the market. The diversified platform
the company has built should position it for
strong sustainable growth. Looking ahead
Finjan remains confident in its vision and
sees multiple catalysts ahead that should
position the it for future progress across all
segments of its business. n
2000 University Ave., Suite 600, East Palo
Alto, CA 94303
(650) 282-3228
www.finjan.com
investors@finjan.com
The company paid consideration to SNN or its affiliates for this article.
www.stocknewsnow.com
 I am thankful for my friends,
my family, my dog, sports,
my legs and my Xbox :)
Braylon O'Neill
6-year-old bilateral above knee amputee
3-time CAF grant recipient
Determined to be the fastest kid on the block

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A L L E N G E D AT H L E T E S . O R G MicroCap Review Magazine 47
1
Stitch Marketing & Research, 2015
 otc MArkets: tGcdF, tsx: tGz

We undertook strategic actions

in 2016, significantly de-risking the
business and expanding our growth
opportunities. For shareholders,
Teranga offers meaningful
upside potential, backstopped
by a robust production profile,
a strong balance sheet, and a
supportive cornerstone investor.

Richard Young, President and CEO

2017 Progress
On track to meet gold production
and cost guidance for the year

Increased gold reserves by more than

400,000 ounces to a total of 2.7 million
ounces at flagship gold mine in Senegal
Two new gold discoveries reported on
exploration property in Burkina Faso
Focused on building its second gold
mine the Banfora gold project
located in Burkina Faso
Industry winner of PDAC Social and
Environmental Responsibility Award
INCREASING ANNUAL GOLD PRODUCTION
(gold ounces)
Guidance Range
205,000 225,000
216,735
182,282
A JUNIOR GOLD PRODUCER
Teranga is a multi-jurisdictional West African gold
company focused on production and development,
as well as the exploration of more than 5,000 km2 of land
located on prospective gold belts. Since its initial public
offering in 2010, Teranga has produced more than
1.2 million ounces of gold from its operations in Senegal,
which has a reserve base of 2.7 million ounces of gold*.
Focused on diversification and growth, the Company
is advancing its Banfora development project and
conducting extensive exploration programs in three
countries: Burkina Faso, Senegal and Cte dIvoire.
Teranga has a strong balance sheet with US$80 million
in cash* and the financial flexibility to grow its business.
* as at June 30, 2017

TERANGA GOLD CORPORATION TSX: TGZ

121 King Street West, Suite 2600
114,460 Produced* Toronto, ON Canada M5H 3T9
Telephone +1 416 594 0000
2015 2016 2017 Email investor@terangagold.com
Guidance Website www.terangagold.com
 Building a Multi-Asset Mid-Tier
Gold Company in West Africa
ONE PROFITABLE STEP AT A TIME

WEST AFRICA ONE OF THE BEST Canadian-based gold mining company

EMERGING GOLD FRONTIERS listed on the Toronto Stock Exchange
Over the last 25 years, West Africa has been one of the
fastest growing regions in the world for gold production. Producing asset in Senegal provides
In 2016, West Africa produced 8.2 million ounces of gold, cash flow to fund future growth
which translates into half of Africas entire gold production.
Fully permitted development project
For example, in Burkina Faso, where Teranga is planning
in Burkina Faso
to start construction of its next mine in 2018, there
were only six producing gold mines in 2012. In 2017,
Exploration opportunities on
that number has more than doubled to fourteen.
world-class gold belts
This is a true testament to the growth of the gold
industry in the mining-friendly jurisdictions where Strong balance sheet
Teranga operates today.
Supportive cornerstone investor
MINING RESPONSIBLY is also largest private employer
Teranga has always taken the approach that sharing the in Senegal and Cte dIvoire
benefits of mining with all local stakeholders is imperative
to its success. Terangas corporate social responsibility Strong social license to operate
achievements are gaining global recognition after winning
several awards in the last year, including the 2017 Proven and experienced
Environmental & Social Responsibility Award from the management team
Prospectors & Developers Association of Canada.

The company paid consideration to SNN or its affiliates for this article.
 P R O F I L E D C O M PA N Y
eskay Mining corp
E skay Mining Corp (TSX-V: ESK) is a TSX Venture Exchange
listed company, headquartered in Toronto, Ontario.
Eskay 130,000 acre exploration holdings
in North West British Columbia Current
drilling project in Red
50 MicroCap Review Magazine
tsx-V: esk, otc MArkets: eskyF
Eskay is an exploration company focused
on the exploration and development of pre-
cious and base metals in British Columbia in
a highly prolific, poly metallic area known
as the Eskay Rift Belt located in the Golden
Triangle, 70km northwest of Stewart, BC.
The Company currently holds mineral ten-
ures in this area comprised of 177 claims
(130,000 acres)
Eskay is targeting precious metal
enriched massive sulphide deposits in its
current drill program of 6,000 9,000
metres on its 4,400-hectare SIB property
in northwestern British Columbia. Joint
venture partner, on the S.I.B. property,
SSR Mining Inc. (formerly Silver Standard
Resources Inc.) (SSR Mining) has the
option to earn up to a 60% undivided
interest in the property by spending an
aggregate of $11.7 million in exploration
expenditures over three years.
The S.I.B. drilling program to date has
successfully identified the target Eskay
Creek assemblage stratigraphy beneath the
CCTF (Coulter Creek Trust Fault) for
over 1 km in strike length, and the explora-
tion work has demonstrated the presence
of alteration associated with footwall zones
to massive sulphide deposits. The comple-
tion of the program is hoped to provide the
evidence of a new Eskay Creek Mine. The
SIB property lies along trend, approximately
4 km south-southwest, of Barrick Golds
former producing Eskay Creek Mine, which
was North Americas highest grade gold
producer between 1994 and 2008, produc-
ing over 3 million ounces of gold and nearly
160 million ounces of silver from 2.2 million
tonnes of ore.
Over the past few years two major deposits
have been discovered on Eskays boarders.
Pretium Resources Inc. (TSE:PVG) to the
north commercially began production this
summer at its BruceJack Mine. Seabridge
Gold (TSE:SEA) to the direct west of Eskay,
with its KSM project is one of the largest
undeveloped gold projects in the world mea-
sured by reserves.
C.E.O, Mac Balkam is an experienced
professional investor in the Canadian mining
industry for over 25 years. He has aggres-
sively invested in Eskay for the past 10 years
and led a re-vitalization of the board and
direction of the company beginning in 2010.
Board members are accomplished Canadian
businessmen strong in capital deployment
in major commercial developments. Eskays
development approach is to joint venture
with significant mining companies with
extensive geological experience that best
compliments the specific objective of the
particular Eskay development program. The
Board members hold more than 17% of the
outstanding shares of the company.
The Board anticipates as the S.I.B. drill pro-
gram with SSR Mining matures and shows
results that proves up the targeted mining
potential, suitors interested in buying out the
company as a whole with its massive 130,000
acres in the Golden Triangle will be in play.
For more information:
Info@Eskaymining.com
www.eskaymining.com n
The company paid consideration to SNN or its affiliates for this article.
www.stocknewsnow.com
www.stocknewsnow.com MicroCap Review Magazine 51
 LIFE SCIENCES CORNER
What BioPharma Investors
Need to Know About
Financial Disclosure
I nvesting in BioPharma is not for the faint of heart. In
fact, investments in this sector are often considered to be
among the riskiest of life science and healthcare plays.
After all, only approximately 10% of com-
pounds in clinical trials will ultimately make
it to market. Most investors in this sector
will point towards two critical factors that
enable success and a big payday. First, novel
science and a partially de-risked technol-
ogy (along with a follow-on pipeline) and
second, a management team with a proven
track record of successfully bringing a com-
pound through development and to market.
After these ultra-important factors and other
macro considerations such as development
challenges, regulatory hurdles and market
influences, what can the financial statements
and related disclosures add to the mix in
order to identify potential red flags?
The financial statements and disclosures
are helpful in assessing and validating cash
burn. After all, efficient capital utilization is
almost always a critical factor for an earlier
stage BioPharma company. The science may
be novel, the pipeline very alluring, but the
cash on the balance sheet may not be suf-
ficient to get the compound or technology
to its next inflection point. We like to think
SEC and FASB regulatory requirements,
n BY ROBERT E. FIORENTINO, CPA
along with the importance of transparency
52 MicroCap Review Magazine
to management and the Boards credibility
would ensure user friendly financial state-
ments with meaningful disclosures. However,
its no secret that obtaining thoughtful and
straight forward disclosures is not easy, espe-
cially when it comes to microcap and smaller
reporting companies!
As such, to evaluate cash burn, you may
have to go beyond merely understanding the
timing of the next inflection point and divid-
ing cash on the balance sheet by the quarterly
or annual operating expenses or operating
loss. The following should be considered:
First, an explanatory paragraph in the
audit opinion may identify a going
concern situation, which essential-
ly means the auditor and company
management dont believe there is
enough cash on hand to last at least
12 months from the financial state-
ment release date. If this is the case,
and an inflection point is not immi-
nent, then you may be looking at
an expensive stock or debt offering
due to the desperate nature of the
company, and significant ownership
dilution on the horizon. Note: Lets
www.stocknewsnow.com
 face it, in the world of life sciences,
the expected inflection points are not
even close to guaranteed. Studies gen-
erally take longer and burn more cash
than originally estimated by manage-
ment. With that premise, you will
want to look closely at the financial
statement disclosures even if a going
concern explanatory paragraph is not
part of the audit opinion.
Review the stock-based compensa-
tion and equity disclosures to deter-
mine the current and expected non-
cash compensation charge, as well as
non-recurring items disclosed else-
where and other non-cash items such
as mark to market adjustments on
past financing derivatives. This will
adjust the operating expenses in the
profit and loss statement with the
goal of providing a proxy for cash
burn.
Review the commitment footnote for
potential significant expenditures or
increases which may not be included
in the current operating statement.
If the company is a public reporting
company, the MD&A liquidity and
capital section and other disclosures
in the business section and risk factor
section of the SEC filing may provide
pertinent forward-looking informa-
tion.
To the extent the company has rev-
enue from out licensing deals or R&D
collaborations, remember that the
cash associated with the revenue may
already be included on the balance
sheet because in deals such as these,
the cash is often received before the
revenue is recognized. This may
need to be factored into the equation
if you used operating loss as a starting
point to develop cash burn estimates.
After an intensive review, if it is still dif-
ficult to gain an appreciation for cash burn
and the respective run rate, you likely have
a potential red flag.
With respect to those same non-cash
www.stocknewsnow.com
items excluded from the cash burn assess- Finally, if the disclosures and MD&A in a
ment, a further assessment may be helpful public reporting company are boiler plate or
to identify a liquidity red flag if you are repetitive, do not have tailored disclosures
dealing with a public reporting company. All that focus on material information or dont
too often microcap companies are saddled seem transparent in nature, what does that
with derivatives from earlier stage financings tell you about the quality of management
because of negotiated investor protection and the board? n
features and/or other accounting nuances.
Robert E. Fiorentino, partner at Friedman LLP, is
These often give rise to embedded deriva-
the Firms Life Sciences Practice leader. Rob has
tives that are bifurcated from the financing over 30 years of experience in business advisory and
and establish a derivative liability on the audit services, as well as private-industry finance
leadership. The private-industry experience includes
balance sheet at fair value. These derivative senior finance positions within corporate, various
liabilities are then required to be marked operating segments and internal audit at a large
Pharma company. Robs business advisory clients
to market with the resulting increases and
have ranged from private companies, to smaller
decreases flowing through the statement reporting public companies, to well established mul-
of operations. Depending on the assump- tinational public companies. He has an extensive
concentration in the Life Sciences sector with bio-
tions used, the profit and loss impact can technology, pharmaceutical, and medical device
be significant and material. Nevertheless, companies, as well as other industries including con-
sumer products, advanced manufacturing and vari-
the impact is dismissed because it is a non-
ous R&D driven industries. Rob specialized in SEC
cash charge which wont impact cash flow or reporting requirements, financing transactions rang-
capital needs. ing from traditional IPOs to Reverse Mergers/APOs,
and M&A transactions. Rob previously worked with
This is typically not a problem, unless the a former Big 6 Firm as well.
non-cash negative profit and loss impact
For more information on Rob and Friedman LLP,
associated with these mark to market adjust-
visit
ments deceases stockholders equity so much www.friedmanllp.com
that you have a listing deficiency with one of or contact Rob at973-929-3652or
rfiorentino@friedmanllp.com.
the major exchanges. To the extent the defi-
ciency cant be remedied, having to move to
a lesser exchange may impact the liquidity
and following of the stock!
Depending on your concerns and the spe-
cific facts and circumstances, the financial
statements and related disclosures can be
meaningful to the decision-making process.
They often shed light on how creative man-
agement has been in raising capital through
non-dilutive means such as state and federal
grants, licensing, R&D and NOL attribute
sales. For more established microcap public
companies, if the companys disclosure and
internal control assessments in the Form
10Q or 10K are not identified as effective,
and the company is far enough along in its
capital raise and seasoning continuum, is
it reasonable that adequate resources were
not previously devoted to internal controls
when the level of R&D spend and outsourc-
ing is so significant and capital utilization is
paramount?
MicroCap Review Magazine 53
54 MicroCap Review Magazine www.stocknewsnow.com
 PROFILED COMPANY
American Gene technologies international
is an hiV cure within our Grasp?
This biotech company has proprietary tech-
nology and therapeutic protocols that are on
track to functionally cure HIV-infection and
make patients impervious to the HIV virus.
A GT is an emerging gene and cell
therapy company with an enhanced
lentiviral platform capable of addressing a
broad range of large and orphan indica-
tions including infectious diseases, immuno-
oncology, and monogenic disorders. AGT
has enhanced the Lentiviral vector in a man-
ner that mitigates the insidious mechanisms
HIV uses to infect T cells and compromise a
persons immune system.
This could mean that an HIV-infected
individual could be made immune to HIV!
This may not only functionally cure HIV
(an industry-term meaning equivalent to
a cure, but not immediately, fully eliminat-
ing all traces of the virus in the patient), it
may also make the individual permanently
immune to reinfection. That would be
important news for the over 1 million HIV-
infected individuals in the U.S., as well as the
estimated 37 million HIV-infected persons
worldwide.
AGTs therapeutic strategy uses gene
modulation both to reduce the levels of
CCR5 and shut down the expression of
gene that were integrated by HIV that are
necessary for HIV viral production. The
delivery method of AGTs treatment is an
Jeffrey A. Galvin
Co-Founder, CEO
www.stocknewsnow.com
AGTs Protocol
autologous cell therapy using ex vivo modi-
fication of T cells. HIV patients enrolling
in the AGT functional cure clinical trials
may first receive a vaccine (the trial will be
conducted both ways to see the difference
with and without this step) to increase the
number of T cells that are most active against
HIV. Next, a draw of approximately liter
of blood from the patient will be filtered
for T cells. The extracted T cells are then
treated ex-vivo with the therapeutic lentivi-
rus AGT103 to protect the T cells from HIV
to restore their ability to clear HIV virus
without being vulnerable to HIV infection.
Finally, the patients T cells are infused back
into the patient to carry out normal immune
function against HIV virus -- thus creating
an anti-HIV immune response and func-
tional cure of the patients HIV.
In some ways, AGTs treatment protocol
is similar to the Novartis treatment for pedi-
atric and young adult acute lymphoblastic
leukemia (a treatment from Novartis that
has been in clinical testing for several years,
was recently unanimously recommended for
approval by an FDA advisory committee and
is likely to receive marketing approval in the
U.S. this September). AGT does a slightly
different transformation (reprogramming)
of the patients T cells, but the type of virus
used is the same, and a substantial portion
of the protocol is very similar. AGT hopes
to improve safety for trial participants by
paralleling some established ex-vivo clinical
A Private company
techniques that have be used in several previ-
ous CAR-T human trials.
Participants are expected to gain natural
immune control of the HIV virus that may
remain in their body, and to be protected
against reinfection.
Although HIV disease in the U.S. and
many other nations seems to be under con-
trol because of highly effective (antiretrovi-
ral) therapy, this disease continues to spread
around the world. Only a small percentage of
HIV+ people in the U.S. (20%) are effectively
treated and the remaining 80% are contagious.
Antiretroviral therapy or highly active antiret-
roviral therapy (HAART) involves powerful
drugs with negative side effects. Even when
these drugs are effective, the patients have
shorter life spans and much higher risk for
cancer, diabetes, liver or kidney failure and
a host of other life-threatening conditions.
This reality for the HIV community makes a
functional cure an imperative, and highlights
the magnitude of the market.
The near-term addressable market for an
HIV functional cure in the U.S. and Europe
ranges from $40 billion to $80 billion. AGT
has attracted a dream team of world-
renown experts in HIV who are collaborat-
ing to optimize and prove their therapeutic
in the clinic.
For more information:
www.americangene.com
info@americangene.com 800-888-9480 n
The company paid consideration to SNN or its affiliates for this article.
MicroCap Review Magazine 55
 OPINION
Junior Resource Market: 2017 Mid-Year Review
I
recently interviewed Rick Rule at the
Sprott Natural Resource Symposium
2017 in Vancouver. Rick is President of
Sprott U.S. Holdings, a publicly traded com-
pany Stock Ticker: SII on the Toronto Stock
Exchange. Rick, welcome back to SNN Live.
Rick Rule: Shelly, on behalf Sprott Shareholders,
its a pleasure to have you here in the conference.
Shelly Kraft: Thank you for having us.
Rick, I want to start with giving you the
opportunity as we do at every annual
Sprott conference for your State of the
Union of the resource market.
Rick Rule: This will be easy, you know
Shelly and I dont need to tell you. The
junior resource business has been through
a tremendous bear market. The Toronto
Stock Exchange Venture Index was off 88% in
nominal terms, probably more like 92% in real
terms. What investors need to recognize is
that bear markets are the authors of bull mar-
kets because this is a capital intensive business.
The consequence of that is this tremendous
bear market will at some point in time give
way to a real bull market. My belief is that
the bear market really ended the end of 2015.
Specifically, I think with regards to precious
metals and precious metal stocks, that were in
the third inning of a nine-inning ballgame. In
other words, were a third of the way through.
The recovery that we had in 2016 was pleas-
ant and dramatic. The markets faded since
then. But its important to remember that were
in a stretch. It isnt like the game is over. With
regards to the rest of the resource sector, were
in the first inning of a nine-inning game. It
doesnt mean that recovery happens in a period
of time thats comfortable for your audience,
but it is inevitable even if its not imminent.
Shelly Kraft: Weve been around a while
in the markets and I see that the Dow Jones
Industrial Index is going up and breaking
56 MicroCap Review Magazine
own records almost every single day. But
Im seeing that gold is creeping up also,
which is very unusual. Silver has seeming-
ly crept up even more on a percentage scale
and the dollar is strong but showing signs
of wekaness. When was the last time this
occurred, seems like an anomaly to me.
Rick Rule: Im not smart enough to
understand all of those correlations. The
correlation thats made sense to me over
time has been that the Delta between the U.S.
ten-year Treasury and the ten-year treasury
strip, which is the markets implication of the
real yield in the U.S. ten-year treasury, deter-
mines the gold price; when the implication is
that we have negative real interest rate, then
gold does extremely well. Whats interesting
about the last 18 months as you point out is
that gold did well the same time that the U.S.
dollar and the U.S. ten-year treasury did well.
In my experience that happened first in
1975, secondly in 2001 and this is the third
time in my 40-year career that Ive observed
this phenomenon. Whats important for your
audience to understand is that in the prior two
instances, the dollar eventually rolled over,
which you point out it may be doing now, and
the consequence of that was that the gold price
soared in the aftermath of that circumstance. Is
past prologue? I dont know, Im not an econo- suggesting is that the better companies in the
mist. Im a credit analyst. What I do know is
Ive seen this circumstance twice before and the
outcome from the point of view of gold hold-
ers, not U.S. bondholders, was very pleasant.
Shelly Kraft: On topic, I see that some of the
juniors stock prices are starting to bump up
a little bit. Now, I dont know if its because
U.S. investors are starting to be attracted to
gold and theyre looking for opportunities
or because some of the other sectors are so
overpriced and toppy. Bottom feeders if
theyve been buying gold outright thats one
thing, but now all of a sudden were seeing
Rick Rule
volumes pick up, and usually volume pre-
cedes price. Am I correct?
Rick Rule: Three answers as to why. First,
the junior market was oversold, and some of
the response that weve seen is seller exhaus-
tion. The second thing is that it takes a long
time to profitably deploy capital. The last
investment cycle that we had in this universe
was the middle part of the last decade. The
capital that was employed in 2004, 2005, 2006,
2009, 2010, is now beginning to bear fruit.
In my experience of over 40 years, it takes a
decade, ten years for district exploration to
begin to yield discoveries. Ten years ago, we
began exploring in places like West Africa and
in the deep parts of Eastern Australia. The
consequence of ten years of focused explora-
tion is were now starting to enjoy the results
and the consequence of that which of course
the news that drives share prices.
And thirdly, its important to remember
in terms of a market that was as old as these
stocks were; that you can move up on fairly
low volumes because you exhaust the sellers.
The stocks have come to be in very, very strong
hands. Hands that will not trade the stock for a
10% or 15% gain, hands that will be looking for
50% and 100% increases. Im not suggesting
that those increases are imminent. What Im
sector are extraordinarily well owned, relative
to other larger, more popular sectors.
Shelly Kraft: Now, Im going to hit you
with something about base metals. Lets
call it, Green Energy. For instance, as you
know, there is less lithium used in a lithium
battery than copper or cobalt or nickel.
How is this for example affecting base met-
als in your opinion?
Rick Rule: I think most of the impact is in
the future, with the exception of course of the
cobalt price, which has done very well. And
you point out something very interesting.
www.stocknewsnow.com
The lithium battery, by value is 4% lithium.
In other words, it is a copper, nickel, cobalt
battery. Interesting also that the worlds four
major lithium producers, pardon me, esti-
mate that collectively they have a hundred
years reserves at current lithium demand.
We dont have a shortage of lithium. We have
a shortage of lithium processing capacity, and
at these prices that will be addressed in a two
or three year plus timeframe.
Many companies that purport to be looking
for lithium, in other words, that dont have any
lithium believe there is a lithium shortage, and
those companies which do have it believe that
theres a surplus. You need to decide yourself
which side is more credible, those that have it
or those that dont. Moving on to the rest of
the battery metals, this is exciting, particularly
cobalt from my point of view. The problem
with cobalt is that you dont find cobalt in
countries that youre comfortable with. You
find cobalt in the Congo and Russia. What
investors want is politically secure cobalt. The
problem with that is that politically secure
cobalt is a fantasy. You want a great country
and you want cobalt. Okay, you want to date
the four prettiest girls from Victorias Secret.
What you want doesnt matter. Its what you
can have. We are attracted to the cobalt space,
attracted enough that were investing in the
Congo and were investing in Russia.
Shelly Kraft: But, I understand that when
youre hunting for copper you could end up
finding nickel, cobalt and other elements?
Rick Rule: Absolutely true. And one of the
things that we hope to do is assist companies
exploring mafic and ultramafic horizons for
whatever happens to be there, and that could
occur for example in lateritic terrains in Brazil
and Australia, which would be very nice.
Believe me, Im not a slave to the Congo. Its
just that when I look for cobalt and I look for
copper, I look for places where its available in
grade, and thats often in challenging countries.
Shelly Kraft: So, here we are at the Sprott
2017 Conference. What are you saying to
the investor audiences when speaking?
www.stocknewsnow.com
Rick Rule: Im saying that you have been
through five very, very bad years. You suf-
fered through the pain, be prepared to enjoy
the gain. Bull markets follow bear markets,
bear markets are the authors of bull markets.
And the bear market that weve just been
through I believe is the author of a pretty
incredible bull market coming.
Shelly Kraft: In your opinion, is there more
cash on the sidelines ready to come in at this
point or are investors spent, in your opinion?
Rick Rule: Not spent at all. Theres tre-
mendous, tremendous dry powder just in
our network. But importantly, you know,
Sprott, and youre aware of this Sprott went
out last year to raise an institutional lending
fund. The first institutional fund that we
ever raised, the first 12 months were fruitless
knocking on doors for no return but ulti-
mately in terms of -- including sidecars, we
raised over $800 million. Theres a tremen-
dous amount of money circling the natural
resources space, more than adequate amounts
of money. Its a function of having the correct
opportunity, the correct management team,
meeting the correct investors. Theres a lot of
money out there, theres a lot of opportunity
out there. Markets are messy. It takes two or
three years to get it right, but its coming.
Shelly Kraft: So, Ive interviewed a lot of
project generators over the course of the last
year. It seems like theres another one born
every day. Whats your opinion on them for
our investor audience if you would?
Rick Rule: Well, the prospect generators,
the people who use their management acu-
men and other peoples money to explore
is arithmetically the most intelligent way
to pursue the exploration business. Its
important to know that not all prospect
generators are the same. Many are what I
would call, and pardon the pun, constipated
generators, meaning that projects come in
but they never get them out. Investors need
to pay attention to which explorers are really
successful and whose success is evidenced
through their ability to attract major mining
companies to joint-venture their projects.
In other words, if there are 40 prospect gen-
erators in the investment landscape, ten will
be worth investing in, not 40.
Shelly Kraft: Here we are in third quarter
2017. How do you see the year ending and
what do you think 2018 is going to look like?
Rick Rule: The rest of 2017 will be choppy at
best. I see in the very near term continued con-
traction in the natural resource markets by
the way youre asking me a question well above
my pay grade. Since you asked Ill answer. Im
quite optimistic about 2018, at least in our own
portfolios, because weve tended to confine
ourselves not to the market in general but to
companies in particular that we see utilizing the
cash weve provided them and using the capital
weve provided them in very, very constructive
ways. One of the things that many people get
wrong in the resource business is they dont
correlate their time expectation with the time
required to add value.
In my experience, you make money in junior
resources by answering unanswered questions,
and in my experience the time required to
answer an unanswered question is 18 months.
For an investor that has trauma holding stock
over a long weekend, the probability that they
would be able to hold onto a stock for the time
necessary to realize the reward seldom occurs.
Whats happened to me and I think has hap-
pened to you Shelly as a consequence of being on
earth for a long time is that an 18-month time-
frame seems less daunting to us than it once did.
Shelly Kraft: You know what, for more
information, lets get your website out
there so our audience can come and visit.
Rick Rule: Delighted, www.sprottglobal.
com. Your audience should subscribe to
Sprotts thoughts, its a great publication and
its absolutely free. n
Here is the link for order-
ing Sprott Conference MP3s:
https://opptravel.webdestin.net/
EventTariff/Index/naturalresour-
ceregistration-SNN082
MicroCap Review Magazine 57
 F E AT U R E D A R T I C L E
The Current Status of the Reverse Merger Market
I n previous articles I have written for
MicroCap Review, I have discussed and com-
pared the various ways that a private company
can become publicly-traded. Briefly, they are:
(a) the traditional IPO; (b) the so-called Slow
PO; (c) the relatively new Regulation A+; and
(d) of course, the reverse merger.
In those articles, I have stated my preference
for using the reverse merger technique: it is by
far the quickest, the most sure, and--although it
doesnt raise capital in and of itselfit can be far
less expensive than a proposed IPO or a Reg A+
offering if they are unsuccessful. So, to summa-
rize my thoughts about these techniques:
These days, IPOs are almost exclusively
accomplished by companies that are far larger
than the usual type of company that completes
a reverse merger, thus significantly limiting the
number of companies that can even contem-
plate an IPO. Another important drawback for
companies that want to go public via an IPO is
that potential offerings are subject to market
conditionsif the stock market is declining,
the underwriter can either delay or even cancel
the offering.
The Slow PO is a term used to describe a
method by which private companies become
publicly-traded: a private company can raise
money from investors over the years, build its
shareholder base, and then make those shares
publicly tradable. The Slow PO requires a
broker-dealer to file a Rule 15c2-11 application
with FINRA to clear the shares for trading.
That application can take several weeks to be
cleared, and does not result in the company
raising any capital. So, the Slow PO can be
used only by the relatively few private compa-
n BY JOHN LOWY, ESQ.
58 MicroCap Review Magazine
nies meeting these requirements.
When it was promulgated in June, 2015,
Regulation A+ was heralded as the panacea
for smaller companies that want to raise capital
in a public offering directly to the public, via
social media and other ways to reach investors,
both traditional and nontraditional. However,
despite all of the hype surrounding it, very few
Reg A+ offerings, other than local banks and
real estate deals, have successfully raised more
than minimal amounts of capital.
The main reason I see for the lack of suc-
cess of most Reg A+ offerings is that social
media-type investors mostly want to invest in
consumer oriented products, but have only
limited capital available, thus requiring issuers
to spend enormous amounts of upfront money
to create the marketing program for the offer-
ing and to build a customer/investor base.
Which brings me to reverse mergers. In
the past 12 months, I have seen an increasing
demand for clean public shell companies, as
vehicles for the reverse merger (Im using the
term shell to describe companies that check
both the shell box and non shell box in their
SEC filings). My sources tell me that they believe
the demand will continue, as the public markets
keep hitting new highs (because of Donald
Trump??). As a result of the continuing demand,
the number of available shells has significantly
decreased, causing an increase in the cost to
purchase and reverse merge with a public shell.
To be clear, not every company is suited to
go public, whether by reverse merger or other-
wise. In the opinion of experts I have spoken
with, the companies best suited to go public are
either the ones that are in the most innovative
industries (True Disrupters), or those with a
history of revenues and earnings. Both types
of companies have the best long-term potential
for up-listing to the NASDAQ or NYSE.
Once a company goes publicagain, no
matter how they get therethe most chal-
lenging problem is establishing liquidity in
the trading market. In my experience, many
CEOs of newly-public companies often dont
fully understand that its far easier to grow the
company and raise capital with an actively-
traded stock. Going public does not create real
(liquid) wealth overnight.
Raising capital, like almost everything in busi-
ness, is a competitive undertaking. Newly-public
companies must compete with the likes of Apple,
Amazon, the big banks, etc. when trying to raise
capital, because retail and institutional investors
are not throwing their money at a company just
because its public instead of private.
In order to build a post-reverse merger
market, newly-public companies need to have
a compelling story, to show Wall Street the
significant upside long-term growth prospects
of their company.
The major upside of a reverse merger is not
simply being publicits what the company
does once its there.
So, the consensus opinion of the experts
is that reverse mergers, which have been
around since the enactment of the Securities
Act of 1933, will continue to be a strong, via-
ble alternative to the other ways to go public.
And, I strongly agree with that consensus.
Many thanks to David Lazar of Zenith
Partners International, for his insights. n
John Lowy is the founder (in 1990) and senior partner
of his law firm www.johnlowylaw.com, and the founder
(in 1993) and CEO 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, capital formation, financial consulting
and initial public listings of all types.
As an attorney, a consultant or principal, John has
led or participated in more than 200 such transactions,
creating market value in excess of $5 billion. He has
been instrumental in leading the process by which
many of these companies have reverse merged, raised
capital, and achieved listings on the NASDAQ or the
AMEX, or were sold to larger companies.
In addition to the U.S., John has completed transac-
tions for clients based in at least 15 foreign countries.
The sectors in which his clients are engaged range
from low tech to high tech, real estate, pharmaceuticals,
medical devices, biotech, oil and gas, mining, renew-
able energy, entertainment, food, agriculture, education
and retail, among others.
He received his B.A. from Tufts University and grad-
uated from the University of Pennsylvania Law School.
He is a frequent contributor to MicroCap Review.
www.ocgfinance.com
www.stocknewsnow.com
 F E AT U R E A RT I C L E
Why List on TSX Venture Exchange?
Q&A with Brady Fletcher, Managing Director, TSX Venture Exchange
Lets start with an overview of TSX Venture
Exchange (TSXV).
TSX Venture Exchange (TSXV) is an impor-
tant driver of the Canadian economy, and a key
element in Canadas innovation and venture cap-
ital ecosystem. TSXV is the junior exchange to
Toronto Stock Exchange (TSX) and is part of
the worlds most successful two-tiered exchange
system. TSXV is a leading platform for venture
stage capital formation, allowing companies to
leverage a public listing to raise public venture
capital, use their share currency for acquisi-
tions and employee incentives, and scale their
business in the public arena. As businesses
grow and mature as publicly-traded companies,
they can graduate to the main board, TSX. In
fact, in the past 16 years, there have been over
635 companies that have successfully graduated
from TSXV to TSX.
What does the V in TSXV stand for? Explain
Venture - we are often referred to as simply
the Venture Exchange and companies that
raise capital on TSXV often describe this
as raising public venture capital. TSXVs
unique eco-system has been built on facilitat-
ing venture stage capital formation and pro-
viding a platform for venture stage companies
to list and build on that foundation.
How do the listing requirements differ from
the Toronto Stock Exchange?
The listing requirements on TSXV are
designed for early-stage companies. TSXV
companies are fully-regulated and all com-
panies must meet initial and ongoing rules
set by TSXV and the Canadian securities
regulators. BUT, these rules reflect the nature
(and stage) of early-stage companies. As a
result, the costs of being a public company
on TSXV are not prohibitive, even for early-
stage businesses. Thats why there are over
1,500 companies listed on TSXV today. Once
listed, the Venture rule set is also designed to
www.stocknewsnow.com
provide additional flexibility to Venture stage
issuers, allowing them to finance more easily,
use shares for acquisitions, scale or pivot their
business as necessary.
What types of companies list on the Venture
Exchange?
Historically, the resource sector has pro-
vided a foundation for both TSX and TSXV,
but today, TSXV is a well-diversified exchange
with companies from the technology/innova-
tion, financial services, industrials, telecom/
media, and natural resource sectors. A com-
mon theme for all of these companies is that
they are looking to access capital (sometimes as
little as a few million dollars, or sometimes over
$100 million) to fund growth and acquisitions.
What are the benefits to US companies list-
ing on the TSXV?
Companies from around the world look to
TSX and TSXV every year to access growth
capital and get liquidity. In particular, US com-
panies look North for the following reasons:
Access to Capital, early U.S. issuers ing to their business plan, etc.
raised $2.7 billion in equity capital on TSX/
TSXV in 2016. Importantly, US companies
are able to go public in Canada sooner than
they typically can in the US
Efficient access to capital - rather than a
prolonged VC due diligence process, listed
issuers can raise money in weeks, or shorter
through the bought deal mechanism because
of continuous disclosure requirements ensur-
ing prospective investors are up to speed
Differentiated deal structures: by raising
capital from a broad group of public investors
(instead of a handful of VCs), entrepreneurs
find that they can often realize more favorable
deal structures (eg: only common shares are
issued, no liquidity preferences, etc.). In many
cases, these terms can help entrepreneurs
retain greater influence over the companys
long-term growth strategy
Brady Fletcher
Good Visibility A large analyst commu-
nity covers small-cap companies listed on TSXV.
This means that even early-stage companies can
get capital markets profile and attention from
investors locally and internationally
Stay local, but raise money globally - US
companies that want to go public on TSXV
do not need to re-incorporate in Canada or
move their head office to Canada. Simply put,
US companies can stay put, while accessing
capital from abroad
Tailored & Flexible Listing Criteria
Listing requirements are tailored to compa-
nies at varying stages of growth. As a result,
the cost of being a public company on TSXV
is not prohibitive for early-stage businesses.
Growth Support TSXV-listed com-
panies have the potential to graduate to the
senior board, TSX, as they grow and mature
Entrepreneur Friendly - entrepreneurs are
able to build their boards with industry lead-
ers, rotate shareholders as necessary through
the exchange, communicate and scale accord-
How can the TSXV help companies with
capital formation and funding?
We believe that the public markets offer a
unique value proposition and in some cases
a better cost of capital for acquisitions while
providing investors with some liquidity and
the company with on-going access to capital.
We also believe that the process of capital
raising can be complicated (and sometime
overwhelming) for entrepreneurs. So, we
have dedicated teams in Canada, the US,
Europe, the Middle East, and Asia that to
work with companies and help guide them
through the process of going public. n
How to learn more:
More information on TSXV can be found at
www.tsx.com/listings or on Twitter @TSX_TSXV
Brady Fletcher, Managing Director
MicroCap Review Magazine 59
 COMMODITIES CORNER
VSTOXX / VIX Volatility
Spread Behavior During
Recent Volatility Events
(The full paper is found at the Eurex Exchange)
T
he Brexit election and the U.S. elec-
tion are now behind us. Several
European elections are on the hori-
zon in 2017. And there doesnt seem to be a
shortage of ideas being discussed for poten-
tial future macro volatility events. This arti-
cle examines the behavior of the VSTOXX
/ VIX spread during recent volatility events.
Could the understanding of the spreads
behavior during past volatility events offer
some insight for future events?
Trading a spread is just another way of
saying trading relative value. An investor
is simply going long one product and short
another product as they are seeking the
spread price or price differential between
the two products to either widen or narrow
based on the position they are holding.
In the case of the VSTOXX / VIX spread
a trader may go long VSTOXX Futures and
short VIX futures when the spread price is
n BY MARK SHORE, MBA
60 MicroCap Review Magazine
oversold or sitting at or near the bottom
of the range. A trader may sell VSTOXX
Futures and buy VIX futures when the
spread is near the high end of the range or
considered overbought and finding resis-
tance.
Often, when the VSTOXX / VIX spread
widens, it is due to one of the below items
occurring:
EURO STOXX 50 Index declines, caus-
ing VSTOXX Volatility index to rally while
the VIX may remain relatively stable thus
causing a widening spread price.
S&P 500 index rallies causing the VIX
index to decline while VSTOXX remains
relatively stable equating to a widening
spread.
S&P 500 index declines and the EURO
STOXX 50 Index declines causing both
the VSTOXX and VIX indexes to rally.
However, VSTOXX will often rally at an
accelerated rate versus VIX thus widening
the spread.
The VSTOXX / VIX spread may be uti-
lized as a sentiment indicator. If the spread
is oversold or overbought it could give an
indication of how the individual volatility
indexes may behave in the near future to
either narrow or widen the spread price. A
second derivative analysis of the spread may
imply that if the volatility indexes should
move, it could be a signal for direction of
the respective underlying equity markets.
For example if the spread is priced above 11,
it would be considered very wide with an
increased probability for either VSTOXX
Futures or VIX futures to move to narrow
the spread and what that may imply about
the underlying equity market?
Table 2 lists the average, median, maxi-
mum and minimum VSTOXX / VIX spread
price and the frequency of how often the
spread price is either above or below a spe-
cific spread price. For example, 0.8 percent
of the time the spot spread price is above
14. The pricing and the frequency of spot
versus futures VSTOXX / VIX spreads are
similar. VSTOXX Futures began trading 2
June 2009, which is the starting date of this
analysis to compare the spread statistics of
the spot price to the futures price.
Monday 24 August 2015 the Dow Jones
Industrial Average opened 1,000 points
lower. The declining U.S. equity markets
triggered a decline in global equity mar-
kets and rallying of volatility indexes. The
VSTOXX Futures / VIX futures spread
came close to going negative at 0.925 on 25
August 2015. The price of the spot spread
actually did go negative at -2.3715. This
narrowing of the spread may be attrib-
uted to the VIX futures rallying faster than
VSTOXX Futures. As noted in Table 2 the
futures spread price is negative 0.7 percent
of the time. Only 11 percent of the time is
the futures spread priced below 2. The price
www.stocknewsnow.com
didnt remain low for long. By 2 September
2015, the spread price rallied above 5 as
VIX futures declined faster than VSTOXX
Futures.
In summary, VSTOXX / VIX spread
tends to maintain similar characteristics
from one macro volatility event to the next.
A spread price below 2 is considered sup-
port and may offer opportunities to buy the
spread or unwind a short spread with the
exception of the financial crisis. When the
spread is priced in the high single digits or
higher it is considered resistance and may be
an opportunity to sell the spread or unwind
a long position. Often the spread will move
higher as VSTOXX Futures leads the rally
Chart 1: Spread price of VSTOXX / VIX spot index spread 1 January 2009 to 9
of the two volatility indexes. Analyzing how November 2016
the VSTOXX / VIX spread behaves dur-
Source: Bloomberg data
ing macro volatility events may offer some
insight for future macro volatility events. n

Mark Shore has more than 25 years of experience in

the futures markets and managed futures, publishes
research, consults on alternative investments and
conducts educational workshops. His research is
found at Shore Capital Research LLC www.shore-
capmgmt.com
Mr. Shore is also an Adjunct Professor at DePaul
Universitys Kellstadt Graduate School of Business
where he teaches a graduate level managed futures/
global macro course. He is a board member of
the Arditti Center for Risk Management at DePaul
University. Mr. Shore is a frequent speaker at alterna-
tive investment events. He is a contributing writer for
Eurex Exchange, CBOE, Swiss Derivatives Review,
MicroCap Review and Seeking Alpha.
Prior to founding Shore Capital Research, Mr.
Shore was Head of Risk for Octane Research Inc
($1.1 billion AUM) in NYC, where he was respon- Chart 6: Daily prices of VSTOXX Futures, VIX futures and VSTOXX Futures / VIX
sible for quantitative risk management analysis and futures spread 3 March 2015 to 31 December 2015
due diligence of Fund of Funds. He chaired the Risk
Management Committee and was a voting mem- Source: Bloomberg data

ber of the Investment Committee. Prior to joining

Octane, he was the Chief Operating Officer of VK
Mr. Shore graduated from DePaul University in futures and options. Futures can be a volatile and
Capital Inc, a wholly owned Commodity Trading
with a degree in Finance. He received his risky investment; only use appropriate risk capital;
Advisor unit ($250 million AUM) of Morgan Stanley.
MBA from the University of Chicago. this investment is not for everyone. The opinions
Mr. Shore provided research and risk management
expressed are solely those of the author and are only
expertise on portfolio construction, product develop-
Past performance is not necessarily indicative of for educational purposes. Please talk to your finan-
ment and business strategy.
future results. There is risk of loss when investing cial advisor before making any investment decisions.

Table 2: Statistics of daily spot and front month futures of VSTOXX / VIX spread 2 June 2009 to 9 November 2016

Avg Median Max Min <0 <2 >8 >11 >14

Spot 5.5 5.0 20.53 -2.70 0.9% 7.5% 18.9% 3.6% 0.8%
Futures 4.7 4.4 17.78 -1.88 0.7% 10.9% 10.2% 0.8% 0.1%
Source: Bloomberg data

www.stocknewsnow.com MicroCap Review Magazine 61

62 MicroCap Review Magazine www.stocknewsnow.com
www.stocknewsnow.com MicroCap Review Magazine 63
 ASIA CORNER

Hong Kong Equity

Market Robust 20 Years
After Handover
W eeks before Hong Kongs 20th anniversary of the handover to China
on July 1st, the Hang Seng Index hit a two-year high as it crossed
over 26,000. For the year, the Hang Seng Index is up 20
per cent bolstered by the expanding flow of
capital from China. Since Britains lease on
the city ended, Hong Kongs stock market
capitalization is up eightfold growing from
HK$3.2 trillion (US$410 billion) as of the
end of 1997 to HK$28.0 trillion (US$3.6
trillion) as of mid-July with the city advanc-
ing to the worlds 7th largest market from
10th largest market two decades ago. China
opening-up policies in an effort for main-
land businesses to become more globally
competitive transformed Hong Kong from a
market dominated by British Colonial firms
and local conglomerates to an international
hub with an increasingly important role as
a gateway to China. Since 2014, a series of
events, including the launch of Shanghai-

n BY LESLIE RICHARDSON

64 MicroCap Review Magazine www.stocknewsnow.com

Hong Kong Stock Connect and Shenzhen-
Hong Kong Stock Connect and the flow
of mainland insurance funds and mutual
funds into Hong Kong, have brought more
mainland capital to the Hong Kong market.
Mainland Chinese companies dominated
Hong Kongs IPO market last year as Chinese
IPOs raised HK$156.6 billion, representing
82 per cent of all listings. Southbound flows
from investors trading through Shanghai
and Shenzhen Connect continue to increase
with many Chinese mom-and-pop retail
investors looking for bargains outside main-
land China. Mainland companies with dual
listings have an average discount of 25% in
the SARS. Longer term, Hong Kongs equity
market is expected to benefit from Chinas
Belt and Road projects and the development
of the Pearl River Delta economic zone.
The Hong Kong Exchange (HKEX) con-
tinues to look for ways to enhance the
citys competitiveness as a global financial
center by attracting high-growth, new econ-
omy companies, diversifying its markets and
developing Hong Kongs technology sector.
Despite ranking as a top destination for
IPOs, the exchange still struggles to attract
significant volume of technology deals. Last
year the financial services sector accounted
for 69 per cent of total fund raised while the
technology sector accounted for only 3 per
cent. As part of strengthening the scale and
quality of Hong Kongs capital markets and
continuing to develop Hong Kongs market
as a competitive international hub, HKEX
is evaluating adding a third board to attract
more technology firms along with start-ups
for new economy and technology compa-
nies. Currently, technology companies are
turned away from listing because they are
unable to meet specific financial yardsticks
due to having no profit or low cash flow.
The proposed new board is expected to have
two markets, one for large companies that
match all the main board requirements but
who cannot list in Hong Kong because they
have dual-class stock structures and a second
market dedicated to start-ups companies.
In the first half of 2017, Shanghai and
www.stocknewsnow.com
Shenzhen overtook Hong Kong as they
knocked the city to fourth place in terms of
IPO funds raised. Hong Kong had 69 new
listings raising approximately HK$53.8 bil-
lion for an increase of 77% from 39 IPOs and
up 23% from HK$43.6 billion raised during
the first half of 2016. With just three large
IPOs, small and medium-sized deals domi-
nate the first half of the year.
Education proves to be profitable with
private schools and tutoring institutions
springing up around China as state schools
cannot meet the growing demand for quality
education among Chinas middle class. Two
successful IPOs in Chinas private education
sector are Wisdom Education International
(6068:HK) which raised US$150 million and
China YuHua Education (6169:HK) which
raised US$245 million. Wisdom Education
International is up 71 per cent while YuHua
Education is up 36 per cent as of July 17,
2017 from their respective IPO dates.
Wisdom Education International is con-
sidered the largest private school group in
South China and YuHua Education current-
ly operates one university and 24 schools in
the K-12 education segment. Listing on the
GEM board this February, Dadi Education
Holdings Ltd (8417:HKG), a consultancy
firm that advises students on overseas stud-
ies, raised HK$148.8 million (US$19.0 mil-
lion) and is up 324% since its IPO. Another
noteworthy IPO on the GEM is In Technical
Production Holdings (8446:HKG), a lead-
ing visual display solution provider for pop
concerts, corporate events and exhibitions
in Hong Kong which raised HK$60 mil-
lion (US$7.7 million) in mid-June and is up
271 per cent as of July 17th since its IPO.
During the first week of July, two technology
companies announced their plans for an IPO
this year. Razor, a California based gam-
ing company backed by Hong Kong tycoon
Li Ka-Shing, is looking to raise more than
HK$600 million (US$77 million). Razer
plans to use the IPO proceeds to develop new
verticals in the gaming and entertainment
industry such as smartphones, to expand
its research and development capabilities,
and finance acquisitions to expand its eco-
system. Founded in 2005 by Singaporean
entrepreneurs Min-Liang Tan and Robert
Krakoff, Razers main business is manufac-
turing gaming peripherals such as mouse,
keyboards, and mouse pads, as well as lap-
tops specifically designed for playing video
games and e-sports events, where audience
watch professional video game players com-
pete on big screens. Around 50% of its sales
come from the U.S. market, while around
13% is from China. Recent investments
and acquisitions include theiconic audio IP
THX, the mobile hardware firmNextBit, and
the SE Asia-focused e-payment specialist
MOL, which is now the master distributor
of Razers zGold virtual currency.
The other technology firm to announce its
IPO is Tencents online publishing service,
China Literature. China Literature is con-
sidered to be Chinas equivalent to Amazon
Kindles service and is expected to raise up
to HK$800 million (US$102 million). The
company has 175.3 million monthly users
across all services and 8.4 million pieces of
content from more than five million writ-
ers. Tencent (0700:HK), one of the largest
internet and gaming company in the world
and Asias highest value technology firm,
owns 65 per cent of the business. Tencent is
expected to retain at least 50 percent control
as China Literature becomes a subsidiary. n
Ms. Leslie Richardson has over 20 years of invest-
ment management and equity research experience.
She operates 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 inves-
tor following in preparation for a public listing.
Additionally, she is the Asian Correspondent for
Micro-Cap Review, www.microcapreview.com, a
financial magazine focused on mirco-cap compa-
nies. Previously, she worked for CCG Elite in assist-
ing 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.
MicroCap Review Magazine 65
 F E AT U R E D A R T I C L E
Man Versus Machine?
No! Man Plus Machine!
M uch has been made over the rise of smart beta and other purely quanti-
tative approaches to investing, many of which are seen as threats to true
active managers, such as our firm, Opus Capital. However, unlike in The Matrix
or any other of a myriad of dystopian sci-fi flicks in which machines overtake
humans, we believe in using the machines to improve our investment processes.
We have been investing in smaller capitaliza-
tion stocks for more than twenty years. In
that time, we have had success with products
that have run the gamut from highly concen-
trated portfolios, where we know the man-
agement team, the company and the indus-
try intimately, and where we use little to no
screening to discover interesting investment
ideas to very diversified portfolios that pri-
marily use quantitative screening to source
ideas. However, in the case of the latter,
some fundamental analysis and judgment is
required to eliminate unsuitable candidates.
Over the years, both of these approach-
es to small and micro cap investing have
worked well for us. Today we explore why
and how a primarily quantitative approach
to the micro cap universe can lead to out-
performance at a lower risk level and with
downside protection a tall task indeed!
Why would a quantitative approach work
in micro caps when it is increasingly obvious
that this approach (or almost any approach)
does not work well in the large cap arena any
longer? Quite simply, the large cap universe
is very efficiently priced (and will remain
so) while the micro cap universe is not effi-
n BY LEN HAUSSLER, CFA
ciently priced and, in all likelihood, will also
66 MicroCap Review Magazine
remain so.
Literally hundreds of analysts and hun-
dreds of thousands of investors study and
have opinions about names such as Apple
(AAPL), Exxon (XON) and Microsoft
(MSFT) and, consequently, the prices for
these highly-followed stocks reflect market
sentiment very well and are fairly valued,
as seemingly no one has an informational
advantage. Not so in micro cap land! Micro
cap stocks tend to be considerably underfol-
lowed by sell-side analysts because there
is less opportunity to generate trading and
investment banking revenue. The average
micro cap stock has fewer than three ana-
lysts covering it, with over 24% of micro
cap stocks having no analyst coverage at all.
And lets not forget that some of the cover-
age of micro cap stocks is paid for by the
companies themselves and may be less than
objective. The other factor coming into play
here for micro caps is that larger institutional
(and arguably smarter) investors are widely
underinvested here due to structural limita-
tions (e.g. lack of liquidity).
Our investment approach seeks compa-
nies with the following characteristics, the
combination of which has outperformed
www.stocknewsnow.com
 lets focus on how we implement our mostly
quantitative investment process.
Our universe consists of companies with
market caps between $50M and $750M. The
stock must have adequate liquidity (average
daily dollar volume of at least $110,000) and
be priced above $2. Approximately 2,200
stocks meet the above requirements. By
comparison, the Russell Micro Cap Index
is comprised of the smallest 1,000 compa-
nies in the Russell 2000, plus the next 1,000
smallest U.S.-based listed stocks. Over-the-
counter (OTC) stocks and pink sheet securi-
ties are excluded.
From here we endeavor to seek the good,
eliminate the bad, and then rank the remain-
ing stocks for inclusion in the portfolio.
The Good We screen for those compa-
nies that are in the lowest 40th percentile in
terms of trailing P/E. At Opus, we believe
that you must have an E to have a P/E so all
companies with negative operating earnings
are eliminated in this step. In the micro cap
universe, this eliminates a huge number of
over long periods of time:
Low Valuation Low P/E, P/B, EV/
EBITDA and High FCF Yield
Lower valuation stocks have historically
outperformed and this phenomenon is espe-
cially apparent in micro caps. Additionally,
lower valuation stocks tend to hold up better
in down markets.
Higher Quality Lower Debt/Capital and
Higher ROE
Lower leverage tends to limit the risk of
default and higher ROE tends to be corre-
lated with higher quality business models.
Additionally, higher quality stocks tend to
hold up better in down markets.
Strong Price Momentum One-Month
Change in the 200-Day Moving Average
Strong price momentum reflects both
investor sentiment and recent success of
the current business model. Momentum
has proved over the years to be exception-
ally effective in sourcing higher performing
stocks in the micro cap universe and aids in
the timing of investment.
The above reflects our philosophy, so now

www.stocknewsnow.com MicroCap Review Magazine 67

companies even in a growing economy such
as the one we are in currently.
The Bad We eliminate those companies
that are in the lowest quintile for year over
year earnings growth, the highest quintile
for leverage (adjusted for industry and sec-
tor averages), the worst quintile for price
momentum and any company that has nega-
tive free cash flow.
The Ranking We then rank the remain-
ing stocks based on valuation, ROE and price
momentum. The valuation measures used
are different for non-financials vs. financials.
Non-financials and financials both use P/E
for a portion of the valuation ranking. For
non-financials, we add a combination of
P/B, EV/EBITDA and FCF yield to the mix,
while for financials we add a combination of
P/TBV and dividend yield .
The most highly rated are added into
the portfolio (subject to sector weighting
limitations) but, in fairness, about 25% of
the names are further eliminated based on
fundamental analysis and our judgment/
investment experience garnered over the last
twenty years. This part of the process is more
art than science, and helps us eliminate com-
panies that violate the spirit of the portfolio.
For example, companies that have earnings
due solely to a one-time event, or that are
making money currently due solely to some
preferential tax treatment, are eliminated as
part of the human side of the process.
At this point, we want to acknowledge
that many of the names in the portfolio will
have uncertainties associated with them.
That is just fine by us we believe that tak-
ing advantage of such opportunities is a key
component in the success of a primarily
68 MicroCap Review Magazine
quantitative process. Mr. Market is prone to
wild swings of emotion, leading to over- and
under-valuations, especially in the underfol-
lowed micro cap universe. Oftentimes, the
negative news is more than reflected in the
current stock price. By demanding a margin
of safety (lowest 40th percentile of trailing
P/E in our process) on every purchase and
adhering to strict sell rules, we minimize the
risk of permanent loss of capital.
The Sell Rules We meet frequently to
refresh the 120-stock portfolio and ulti-
mately turn the entire portfolio over once
a year, on average. As new information
becomes available, we sell those stocks that
have sharply negative relative returns and
those stocks that no longer pass the screen,
and replace them with more recent higher
ranking stocks that are not currently in the
portfolio.
Conversely, winning stocks can run until
their valuations are so rich that they violate
our screen valuation discipline. Net-net,
we allow our winning stocks to run much
further than we allow our losing stocks to
fall, and it is this asymmetry that helps us
generate superior performance for our cli-
ents while minimizing downside.
The result of our investment process is a
highly-diversified portfolio of stocks that, in
the aggregate, exhibit lower valuation, higher
quality and stronger price momentum vs.
the micro cap benchmarks.
So how has all this worked so far over the
last three plus years that we have been imple-
menting this strategy? So far, the results are
encouraging as seen in the above table.
As we would expect, the standard deviation
(risk level) over this period of time has been
about 20% lower than the benchmarks and
performance in down markets has been con-
sistently positive on a relative basis.
Our process has been successful so far and
certainly provides evidence that the combina-
tion of machine (the quantitative portion of the
approach) with man (the fundamental review)
is an effective approach in the micro cap space.
However, one can never be complacent and the
investing environment can and does change
dramatically over time, so you should expect
that any successful investment process should
continue to evolve in order to consistently
thrive, including our own.
Interested in learning more about this
strategy? Visit www.opusinc.com, follow the
firm on Twitter and LinkedIn, or call (513)
621-6787 for more information! n
About the Author
Mr. Len Haussler, CFA is responsible for research
and portfolio management for Opus investment
products. With more than 36 years of experience, Mr.
Haussler was the assistant treasurer and director of
Investments at Cincinnati Bell Inc., before co-found-
ing Opus in 1996. While at Cincinnati Bell, he devel-
oped the investment policy for the Employees Benefit
Funds and directed investments for more than $1 bil-
lion in assets. Prior to Cincinnati Bell, Mr. Haussler
worked as the manager of planning and analysis for
the Mead Corporation, taught at the University of
Cincinnati and performed various accounting, audit
and tax duties for Arthur Andersen LLP.
About Opus Capital Management
Opus Capital is a minority- and woman-owned
investment management firm based in Cincinnati,
OH. Founded in 1996, the firm leverages its expe-
rienced and dedicated team to provide investment
solutions in the high-quality value equity space. With
its experienced investment team, Opus Capital offers
separate account management and investment sub-
advisory services to a diverse group of public funds,
insurance companies, corporations, endowments,
foundations, registered investment companies, Taft-
Hartley plans, and high net worth individuals.
Important Information
The net returns mentioned reflect the deduction of
advisory fees and other expenses a client may incur in
the management of the account. Opus advisory fees
are disclosed in Part 2 of our Form ADV. The perfor-
mance data mentioned represents past performance,
which is no guarantee of future results. Investing in the
securities of smaller capitalization companies involves
greater risk and the possibility of greater loss of capital
than investing in larger capitalization and more estab-
lished companies. You should carefully consider your
investment objectives before investing. Information
presented supplements the composite presentation,
which can be found at www.opusinc.com. Data as of
3/31/17, unless noted otherwise.
www.stocknewsnow.com
 LEGAL CORNER
What is an ICO?
N ow that we have gotten used to all of the
equity crowdfunding buzzwords like
Reg A+, Rule 506(c), Title III and Reg CF, a
whole new array of buzzwords has come our
way. They include ICO, blockchain, tokens,
cryptocurrency and smart contracts. My new
obsession is trying to figure out this whole
ICO business and whether there might be
an angle for my clients, who could either be
investors in ICOs or the entrepreneurs that
sell tokens in an ICO to raise capital for their
companies. Given the hours of research that
I have done, I thought it would be helpful to
share with you what I have learned so far.
This article assumes that you have a basic
understanding of cryptocurrencies and block-
chain. If you dont, you may want to read The
ultimate 3500-word guide in plain English to
understand Blockchain by Mohit Mamoria,
which is the best beginners guide to crypto-
currency and blockchain that I have found.
initiAl coin oFFerinG (ico)
According to Smith + Crown, a research group
focused on revolutionary technologies in the
emerging field of cryptofinance, an ICO is an
event in which a new cryptocurrency project sells
part of its cryptocurrency tokens to early adopt-
ers and enthusiasts in exchange for money today.
So, companies basically pre-sell tokens that fund
the development of a new cryptocurrency or
related technology. Instead of paying cash in
exchange for tokens, investors pay in a cryptocur-
rency like Bitcoin or Ethereum. The investors in
n BY LOUIS A. BEVILACQUA, ESQ.
www.stocknewsnow.com
an ICO, or token sale, will make money if the new
cryptocurrency or related technology becomes
popular and the tokens appreciate.
According to Enzo Villani, CEO of
Equities.com, an ICO thought leader, Many
organizations in traditional finance are
researching and developing blockchain and
cryptocurrency solutions as we speak. At
Equities.com, weve seen a surge of crypto-
currency clients that are public and private
companies working on ICOs that are strate-
gic and add benefit to the markets.
You can find a list of ongoing and pro-
posed ICOs on websites like ICO Tracker or
through forums like Bitcointalk. Each ICO
will typically have an offering page, which
is a website page containing information on
the offering. The offering page will typi-
cally include a link to a whitepaper for the
cryptocurrency project which is analogous
to a prospectus in an IPO, except that the
contents of the whitepapers are not regulated
and the whitepapers tend to have less dis-
closure about risks. The offering page will
also contain information about the project
team, the goals of the project, a timeline, and
other useful information. If you desire to
invest in ICOs, I recommend that you find
offerings that are covered by an independent
research report. Smith + Crown maintains a
curated list of ongoing and upcoming token
sales and publishes summaries, profiles and
detailed research reports on different ICOs.
Given the lack of legislation in this area,
companies considering an ICO should fol-
low best practices. First, companies should
focus on transparency. The whitepaper
should include the same type of disclosure
that a reasonable investor would want to
see before making an investment decision.
Second, the founders should provide some
proof that their technology is viable. Lastly,
the use of an escrow account, where funds
are released over time, is an additional deal
feature that could be added to provide inves-
tors with additional comfort.
If the ICO concept still seems too big to get
your arms around, consider investing in a fund
that is managed by experts that have a better
chance of choosing the winners. Boustead
Securities, a boutique investment bank, is help-
ing some of these funds raise capital. According
to Keith Moore, the CEO of Boustead, While
there is much debate whether ICOs are securi-
ties, we believe that ICOs will ultimately be
considered securities transactions and have
approached the ICO industry with the same
institutional approach we take with all offerings.
We believe the benefits of blockchain technolo-
gy will drive down the costs associated with and
improve transparency and disclosure of securi-
ties transactions and we are looking forward to
helping the industry with those benefits. n
Mr. Bevilacqua is the founding member of Bevilacqua
PLLC (www.bevilacquapllc.com), a boutique trans-
actional corporate and securities law firm. Mr.
Bevilacqua counsels companies of every size ranging
from entrepreneurs with just an idea to established
companies whose securities trade on the NYSE or
NASDAQ. He has broad experience representing
issuers in public offerings and private placements of
securities (including private placements under Rule
506(c) of the Securities Act, crowdfunding offerings
under Title III of the JOBS Act, and Regulation A+
offerings), Exchange Act compliance, angel and ven-
ture capital financings, other areas of equity and debt
financing and mergers and acquisitions.
Bevilacqua PLLCis a boutique transactional law
firm that understands entrepreneurs and provides
goal oriented legal services that facilitate agreement
and closure. Instead of being an impediment to
progress, Bevilacqua PLLC proactively finds solu-
tions that enable its clients to achieve their goals.
In addition to having significant legal experience,
the firms founder is also a business person and
entrepreneur and utilizes his business experience
to give context to the legal services that the firm
provides. Bevilacqua PLLC handles all types of
public and private offerings of securities, including
equity crowdfunding (Regulation CF, Rule 506(c)
and Regulation A), PIPEs and other Regulation
D and Regulation S private placements, registered
direct offerings and initial public offerings. The firm
also handles domestic and international mergers
and acquisitions and joint ventures. The firm also
provides services in the areas of SEC maintenance
and compliance, general corporate, formation, equity
incentive plans, reverse mergers, broker-dealer regu-
lation, venture debt and traditional loan agreements
and similar matters.
MicroCap Review Magazine 69
 PPMT Capital Advisors, Inc. DO WE HAVE
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Capital Advisors to successful growth companies, their CEOs,
Boards
70 and institutional
MicroCap Review Magazineinvestors since 2009. www.stocknewsnow.com
FitzGerald Yap Kreditor LLP
AwardWinning Business Lawyers for Over 30 Years

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MicroCap Review Magazine 71
16148 Sand Canyon Avenue, Irvine, California 92618
www.stocknewsnow.com
 F E AT U R E D A R T I C L E
5 Takeaways from Our
Small-Cap IR Summit
C hanges in market structure, increased listing requirements and a
decline in research sponsorship have also made the U.S capital mar-
kets challenging for small-cap companies.
But that doesnt mean there isnt reason for
optimism. Small-cap and microcap com-
panies who demonstrate a willingness to
step out of their comfort zones and try new
approaches to todays more innovative and
cost-efficient capital raising methods will
reap the benefits.
As part of this years NIRI conference,
OTC Markets Group worked with the team
to organize and moderate a panel of industry
experts dedicated to addressing the needs of
small cap IR professionals.
5 tAkeAwAys FroM our
sMAll-cAP ir suMMit
https://blog.otcmarkets.com/2017/07/05/5-
takeaways-from-our-small-cap-ir-summit/
n BY JASON PALTROWITZ
72 MicroCap Review Magazine
Below are key take-aways from our panel:
Small Cap IR Summit: New Ideas for
Creating Interest & Value
be Visible:
Leo Hinkley, Managing Director, Investor
Relations, BBX Capital said it best, If people
dont know you exist, they cant buy you.
His philosophy is to be featured on as many
screens as possible and to become as inno-
vative as technology will allow. But, he
cautions this must all be done with an eye
towards compliance and remaining inside
the bounds of Reg. FD.
Your primary goal is to ensure that infor-
mation about your company is easily acces-
sible to investors. Take steps to establish
www.stocknewsnow.com
a strong web presence post your IR
presentations and earnings presentations
to your website, film analysts events, web-
cast investor days and use social media to
amplify your corporate news and brand
messaging.
Find your niche:
When it comes to attracting buy-side inter-
est, start by taking a hard look at your com-
pany and your peers. Most firms operate
under a specific mandate, so you need to do
your homework to determine which firms
might be a good fit for your company.
What is your companys valuation? Look
at firms that have holdings in the small cap
space
Look at your sector whos investing in
your industry?
Do you pay a dividend? Income-focused
investors may be a good target for your
company
Explore family offices vs. standard institu-
tional portfolio managers
Studies have suggested that for companies
under $500 million, 80% of their stock was
actually held by retail investors making this
audience an organic fit and a key target for
small cap companies.
Make the most of your
Event Calendar:
With a new conference popping up on vir-
tually a daily basis, its important to find
the ones that are reputable and tailored to
the Small Cap market. Suggestions as to
some of the more popular events included:
LD Micro; Marcum; Sidoti; Virtual Investor
Conferences and events sponsored by the
CFA Institute.
Other tips included scheduling an Analyst
Day in conjunction with a group of com-
panies similar to yours. This collective
approach gives people a greater incentive
to attend and helps make the most of their
travel and itinerary.
www.stocknewsnow.com
Accessing Research:
Everyone acknowledged that while research
is vital to investors, it has become increas-
ingly difficult for most small-cap companies
to garner coverage. This shows that a more
novel approach is often needed to get to the
desired result. First, look at the analysts
that cover your peers and your industry/
sector. They may be willing to meet with
you to learn more about the industry and
deepen their knowledge. The sell-side can
also prove to be another great access point.
Look at smaller boutique banks or firms
that you aspire to work with, but be realistic
about your short list and the timeline to get-
ting there.
Another option is to arrange meetings
with Institutional Sales staff. They will often
bring forth and highlight shareholder ques-
tions, which works well if you dont presently
have coverage.
And lastly, quality sponsored research is
often a favorable tool when looking to pro-
vide investors with access to information
about your company. Look for reputable
firms that leverage the same analysts to cover
their company-sponsored research who also
cover traditional coverage. OTC Markets
Groups research marketplace includes three
firms that should be considered by t compa-
nies interested in generating coverage.
Watch out for Red Flags:
There still a lot of sharks looking to prey
upon small companies. Thus, IR profession-
als need to keep their guard up, proceed with
caution and take a more critical look at the
opportunities with which they are presented.
For example, partners and vendors that are
reputable will want to get paid in currency/
dollars. If someone asks for stock in your
company, rather than a check thats a red
flag. One important suggestion is to care-
fully read the about us and disclosure
pages as a way to further examine the details
on exactly what these service providers are
offering.
On behalf of the team at OTC Markets a
special thanks to my fellow panelists:
David Calusdian, President, Sharon Merrill
Associates
Leo Hinkley, Managing Director, Investor
Relations, BBX Capital
Randy Renfrow, Partner, DePrince, Race &
Zollo, Investment Advisors n
Jason Paltrowitz, Executive Vice President -
Corporate Services
Jason Paltrowitz is Executive Vice President,
Corporate Services at OTC Markets Group, where
he is responsible for managing the firms interna-
tional and domestic Corporate Services business.
Drawing upon his expertise in cross-border trad-
ing and as a recognized proponent of Reg A+ and
small company capital raising, Jason is an advocate
for small cap issuers, start-ups, and entrepreneurial
innovators working to alleviate the cost, time and
complexity associated with being a public company.
Prior to joining OTC Markets in October 2013,
Jason was Managing Director and Segment Head
at JP Morgan Chase responsible for the custody,
clearing and collateral management business in the
Corporate and Investment Bank division. Jason also
held multiple senior management positions at BNY
Mellon, most notably, as Head of M&A for the
Financial Markets and Treasury Services Sector and
11 years as the Head of the Global Capital Markets
Group in the Depositary Receipt Division. Jason
currently serves on the Board of Directors of the
Crowdfunding Professional Association (CfPA) and
also served as a member of the Board of Directors
at OTC Markets Group from 2008-2011. Jason holds
a Bachelors degree in International Relations from
Boston University and received his MBA from the
NYU Stern School of Business.
About OTC Markets Group Inc.
OTC Markets Group Inc. (OTCQX: OTCM) oper-
ates the OTCQX Best Market, the OTCQB Venture
Market, and the Pink Open Market for 10,000 U.S.
and global securities. Through OTC Link ATS, we
connect a diverse network of broker-dealers that
provide liquidity and execution services. We enable
investors to easily trade through the broker of their
choice and empower companies to improve the qual-
ity of information available for investors. To learn
more about how we create better informed and more
efficient financial markets, visit:
www.otcmarkets.com.
OTC Link ATS is operated by OTC Link LLC,
member FINRA/SIPC and SEC regulated ATS.
Subscribe to the OTC Markets RSS Feed
MicroCap Review Magazine 73
 HELPING
BUSINESSES
NAVIGATE
SINCE 1912

LAW FIRM OF CHOICE

For Emerging Growth Companies in Public Capital Markets

Smith Anderson brings a real confidence and calmness to a transaction and are strategically
excellent. They walked us through the process really well and the work they did was flawless.
Client quotation from CHAMBERS USA 2016 Americas Leading Lawyers for Business

74 SmithLaw.com
MicroCap Review Magazine www.stocknewsnow.com
 F E AT U R E A RT I C L E
Impact of the Trump Administration on the Price of Oil
P
resident Trumps withdrawal from
the Paris Climate Accord might be
good for the Oil Industry but will
erode the price of oil even further as the per-
ception is that drilling permits will become
easier to obtain. During the first week of
June, Brent crude fell 1.8% to $49.71 a barrel
on Londons ICE Futures exchange and the
West Texas Intermediate futures were trad-
ing down 1.9% at $47.44 a barrel.
The slides in price began when the
Organization of the Petroleum Exporting
Countries (OPEC) and other major produc-
ers agreed to extend ongoing production
cuts by nine months on May 25. However,
the messages sent by the various participants
were mixed and investors have expressed
their concern about rising production. EIA
reported last week that U.S. average daily
output hit its highest level since August 2015.
The OPEC decision was widely anticipat-
ed but many investors were hoping that the
producers would be even more aggressive as
they aim to work off a glut that has weighed
on the market for nearly three years.
At the same time, Libya, a member of
OPEC that is exempt from the agreement
to cut production, is once again ramping up
output, according to its National Oil Corp. It
seems that despite the upbeat declaration by
the Saudi Minister of Energy and his Russian
counterpart the market is being driven by
supply & demand and the rising US oil sup-
ply is driving a lower price. A plethora of
producers outside of OPEC are pushing up
n BY FREDERIC SCHEER
www.stocknewsnow.com
their production for export such as Brazil
and Kurdistan. This is not supporting a
higher price.
In such an environment, where to invest
in the O&G industry becomes a difficult
dilemma. Much of the oil and gas industry
has survived an especially tough few years
with weak demand and low prices and it
has been difficult for companies to make
strategic decisions and to plan for the future.
o&G inVestor 101
Investing should not be a guessing game.
Although there are forces beyond your control,
lets try to set up a logical approach to avoid
the big mistakes. What should I look for in a
microcap O&G company before I invest?
First some due diligence and understanding
the market trends. Are we in a positive market,
negative market, is there a lot of volatility, etc.
What are the main components that could
affect an investment. There are a lot of blogs
on O&G that will give the temperature of the
market at the time of an investment and will
describe the global trends. Although no ana-
lysts have a magic wand, their knowledge of
the market will provide the necessary under-
standing of the major trends.
My target company: You understand the
trends now you have selected a company,
lets try to dissect the information. For a
public company, it is easy -normally- The
SEC.gov website allows you to access all
public disclosures and statements as well as
all financial reporting issued by companies.
A glance at the last 10K/ Annual report of a
couple of years and the last Quarterly report
(10Q Form) will start to describe the overall
status of any company.
Lets be a little bit more accurate and look
for the key factors of an O&G company that
will allow you to make an intelligent decision:
Revenue and trends. Is the revenue grow-
ing or stable? A decrease in revenue over
the past three years is common for many
microcap companies in the O&G industry
due to market conditions but was it accom-
panied by a reduction in SG&A? What was
the internal company trends of wages and
compensation of top executives. If all have
reduced or stayed stable it is a good indica-
tion of management strategy and the health
of the Company.
Strategy of the Company: Is the company
favoring cash-flow versus investment? What
is the reserve strategy of the Company?
What is the assets position of the Company
especially active assets such as reserves and
equipment?
Indebtness: What is the level of the debt in
the Company. The large cap O&G companies
have taken large loans over the past three
years but some of the Banks have called such
loans and have reduced their exposure. What
is the position of your target microcap com-
pany with respect to bank or financial insti-
tutions? Are loans in default and or being
reimbursed? What is the overall indebted-
ness of your target company?
Reserves: How do you know the value of
proven reserves vs unproven speculative
potential reserves when examining your
investment strategy? Reserves are a big part of
an O&G stock balance sheet. A basic review
is to make sure that the reserves are valued at
the current market price of oil and not an old
historical value that could throw off the real
value. Always try to understand the reserves;
are these reserves currently in exploitation or
is it just a dormant investment, or specula-
tive based on future expectations. n
I wrote this article myself in reviewing public dis-
closures, and it expresses my own opinions.
Frederic Scheer is CEO of L6 Chemicals & Logistics,
an Oil trading company. He is also the CEO of Libra6
Management, Corp, a small private equity company
operating in new alternative technology, media and
chemicals. Scheer was the Ceo of several public com-
panies including Cereplast a biomaterial company,
the Cannon Group, an entertainment company and
Imperials Hotels a hotel management company.
MicroCap Review Magazine 75
 PROFILED COMPANY
bnk Petroleum, inc.
B NK Petroleum, Inc. is an oil and gas exploration and development
company focused on finding and exploiting large, predominantly
unconventional, oil and gas resource plays.
Operators in SCOOP and STACK Plays
76 MicroCap Review Magazine
tsx: bkx, otc MArkets: bnkPF
BNKs operations are focused on its
Tishomingo Field, located in the SCOOP
region of the SCOOP/STACK area of
Oklahoma. The SCOOP/STACK region is
currently among the hottest oil plays in the
United States. BNK has amassed over 16,800
acres in this project and has proved and
probable reserves of 42 million barrels of oil
equivalent (BOE) from the Caney formation
which are valued at $370 million per its last
reserve report dated December 31, 2016. In
addition, its proved, probable and possible
reserves were estimated at 66 million BOEs
with a value of $695 million also per its last
reserve report. The reserves were evalu-
ated by Netherland, Sewell and Associates,
Inc. and are summarized in BNKs most
recent Statement of Reserves Data and Other
Oil and Gas Information available at www.
BNK Drilling Rig #1
sedar.com and at www.otcmarkets.com. In
2016, the Company averaged 1,045 BOEs a
day of production which generated positive
operating cash flow from continuing opera-
tions of $5.2 million during the year where
the average West Texas Intermediate Oil
price was $43.15.
In the Tishomingo Field, BNK originally
developed the Woodford shale formation
by drilling and participating in about 40
Woodford shale wells. The Woodford shale
lies about 350 feet below the Caney shale
that holds BNKs current reserves. BNK sold
its acreage to XTO Energy (a subsidiary of
Exxon) for $147 million in 2013, but retained
its rights to develop the slightly shallower
Caney formation. XTO Energy now owns
over 280,000 acres in the SCOOP play and
surrounds BNKs acreage. In addition,
during the sale, BNK negotiated the right to
utilize the existing Woodford gas gathering
system, eliminating the need to build out
costly infrastructure for the development of
its Caney wells.
BNKs latest reserve report ascribed addi-
tional 157 well locations to its reserves, so
the Company has many future well locations
that it can drill. In addition, the reserve
report is only evaluating 68% of BNKs acre-
age in the field. As the Company continues
to drill wells on its acreage further to the east,
BNKs management believes that its reserves
base will increase even further as this acreage
is added to future reserve reports. BNK has
been operating in the Tishomingo field since
2005 and has acquired information on the
Caney shale that was penetrated originally
www.stocknewsnow.com

BNK Drilling Rig #2
to produce from the deeper Woodford wells.
Therefore, its technical team has an excellent
understanding of the geology which makes
the drilling risk lower by design.
The Company has a very strong manage-
ment team in place. Wolf Regener is the
CEO and he has 30 years of oil and gas
experience in key senior executive posi-
tions in a number of companies. He has
had many different roles throughout his
career, including an extensive operations
and finance background. BNKs CFO is
Gary Johnson who is a CPA with over 25
years of experience including his role at
Occidental Petroleum where he was Director
of Technical Accounting. At Occidental
Petroleum, Gary was responsible for the
companys public filings and worldwide
BNK Drilling Rig #3
www.stocknewsnow.com
accounting compliance. Ray Payne is the
Vice President of Operations and his previ-
ous job was with Marathon Oil Company
as Manager Drilling and Operations where
he developed Marathons South Texas Eagle
Ford shale asset, which in two years added
more than a billion barrels of reserves.
In late 2014, when oil prices dropped so
dramatically, BNK quickly stopped its drill-
ing program. Since 96% of its acreage is held
by production from the previously drilled
Woodford wells, the Company did not have
to continue to drill wells to hold on to its
current acreage position.
Now that oil prices have somewhat recov-
ered from the lows of 2015 and 2016, the
Company has restarted its drilling program.
According to Wolf Regener, BNK is cur-
rently planning on fracture stimulating its
latest 2 wells in 3rd quarter 2017, which have
already been drilled and cased. These two
wells incorporate all the Companys learn-
ings to date, which we believe will result
in the most productive wells we have had,
and will demonstrate that we can have good
rates of return even in a lower oil price
environment.
BNKs Tishomingo field production
generated $26 per BOE of production
(netbacks) in the first quarter of 2017. If
cash received from its hedging program
is included in the BOE calculation, then
BNKs netbacks increase to about $33 per
BOE for the quarter.
The Company also has a new financing
agreement and existing oil hedges to minimize
fluctuations in cash flow going forward. In
June 2017, BNK announced a new $25 mil-
lion line of credit provided by BOK Financial,
which has a five year term and provides a
lower interest rate compared to their previ-
ous loan. Gary Johnson, BNK CFO stated,
The new line of credit will save the Company
about $650,000 per year of interest expense,
assuming the line is fully drawn. We have
also lessened the impact from oil price swings,
as we have oil hedges in place for 75% of our
forecasted production from our existing wells,
at an average of $61.55/barrel for 2017 and
$53.72/barrel for 2018.
BNK expects that the productivity of
the two upcoming well completions will
demonstrate the potential excellent rates
of return from its Caney formation wells.
These latest two wells incorporate every-
thing we have learned from our previous
wells and we are confident the new wells
will quickly increase our production and
cash flow, so we can accelerate the develop-
ment of the large reserves we have in our
field stated Ray Payne, Vice President US
Operations. BNKs plan going forward, is
to utilize the operating cash flow and new
bank line to drill more wells, prove up addi-
tional reserves, and increase production to
grow the value of the Company.
www.bnkpetroleum.com n
The company paid consideration to SNN or its affiliates for this article.
MicroCap Review Magazine 77
 OPINION
Uranium Exploration and
Mining Public Companies
U
ranium exploration and mining
public companies are a contrarian
investors dream and theyre hiding
in plain sight.
The feedstock for nuclear fuel, uranium
has been mired in a 6-year bear market
which has seen the price of uranium decline
over 85% from its peak to sit near a 12-year
low.
The equities of uranium exploration and
mining companies have been decimated.
The peak saw 500 companies, today there
are just around 50. The stock prices of most
miners have declined by close to 90%.
The bear market began following a nucle-
ar accident in March 2011 at the Fukushima
Daiichi nuclear power plant in Japan and
caused a tsunami which disabled the power
supply and cooling system which triggered
three nuclear cores to meltdown.
n BY MIKE ALKIN
78 MicroCap Review Magazine
Following the incident, Japan shut down
all 54 of the countrys reactors for safety
checks. That took 13% of uranium demand
off the market. Reactors have been slow to
come back. Five are on-line. Nearly 20 are
scheduled to be back by 2019 and will ulti-
mately reach 42 powering the electric grid.
Negativity permeates the existing investor
narrative and is well captured in the price of
the commodity and reflected in stock prices.
The reality based on the outlook for nucle-
ar power and the laws of supply and demand
paint a very different and optimistic picture.
Nuclear power is here to stay. Its 11% of
global electricity output and 20% of the USs.
Its a large-scale solution for solving many
countries poor air quality problems.
Its growing - 60 reactors world-wide are
under construction totaling $750 billion in
committed capital. Growth will be about 3%
per year through 2035.
Nuclear is carbon free, available 24/7,
unlike wind or solar providing only intermit-
tent power (when the wind is blowing or the
sun is shining) and what comes as a surprise
to many, its the safest form of electricity
generation on a death per terawatt of energy
produced.
A pending supply shortage is also good
news for bulls. Despite temporary excess sec-
ondary supply pressuring the market, there
is an inherent primary mine shortfall of
about 10%. The miners are working to shift
the supply dynamics back their way.
Miners are selling uranium for $20/lb and
mining it for $50. That math doesnt work.
Miners are shutting in some production and
putting new mine plans on hold. Most of the
new mines require $60/lb uranium to make
money.
Thats a problem for nuclear plants which
are entering a uranium contracting cycle.
They need to buy two years ahead of needs.
30% of their uranium needs for 2020 are not
under contract and 75% are unmet by 2025.
Given new mines can take as long as a
decade to come on line, and some existing
production is being shut down, there is a
pending supply shortage right around the
corner.
Miners need $60 to incent new produc-
tion. The commodity is $20 today. Without
uranium, the lights go off. We think utilities
will choose providing lights to its customers.
This bodes very well for the uranium
equity sector. n
Mike Alkin is the Founder and Director of Research
for The Stock Catalyst Report, an investment news-
letter that offers investors the opportunity to join the
journey in the search for value through the eyes of an
experienced former hedge fund manager.
Mike spent 20 years in the hedge fund industry.
He worked for a few multi-billion dollar hedge
funds. During his career he was an analyst, portfolio
manager and partner. At times, he was responsible
for several hundred million dollars of capital and
traveled to many countries throughout the world,
some places where many dont often look searching
for mispriced industries and stocks.
www.stocknewsnow.com
 PROFILED COMPANY
Goviex uranium inc.
A Growing, Africa-Focused uranium company
G
oviEx offers its shareholders a
unique opportunity to be part of
the green energy solution. With
mine-permitted projects, outstanding miner-
al resources(1), a seasoned management team,
and industry-leading shareholders, GoviEx is
positioning its projects to take advantage of
anticipated higher uranium prices that may
be the consequence of, among other things,
expected mid- to long-term uranium supply
shortages.
oriGins
GoviEx was founded by Govind Friedland,
son of internationally-renown mining entre-
preneur Robert Friedland. While living in
China, Govind became acutely aware of the
air pollution crisis that was devastating the
health of Chinas citizens.
Applying his business development and
geological engineer expertise, he explored
the opportunities available for nuclear
energy as a clean energy solution and the
viability of uranium mining as a business.
GoviEx was born out of that exercise and
acquired the exploration ground for what is
now the mine-permitted Madaouela Project
in Niger.
MAdAouelA ProJect
The Madaouela Project is located adjacent
to Arevas existing uranium mines, which
have been producing approximately 8% of
the global uranium supply for almost 50
years. This proximity means that the project
is advantageously positioned with access to
existing roads, ground water, grid power, and
www.stocknewsnow.com
tsx-V: Gxu, otc MArkets: GVxxF
a skilled labour force that resides in nearby
communities.
One of the most compelling advantages of
operating in Niger is its consistent and well-
developed mining and exploration permit-
ting environment. The Madaouela Projects
Environmental Permit was approved in
July 2015 (approximately six months from
the date of the ESIA submission), and was
closely followed by Mine Permit approval
in January 2016. Historically, the permit-
ting process for uranium projects in North
America has taken anywhere from seven
years to over two decades. The relative speed
of the process in Africa is one of the reasons
GoviEx focuses on African projects.
Mineral Resources
GoviExs second mine-permitted project
is the Mutanga Project in Zambia. The
Falea Project in Mali is in the explora-
tion stage. GoviExs current projects have
the following combined mineral resources:
Measured Mineral Resources of 28.59 Mlbs
U3O8, Indicated Mineral Resources of 95.70
Mlbs U3O8, and Inferred Minerals Resources
of 73.11 Mlbs U3O8.
leAdershiP And industry
suPPort
Daniel Major was appointed CEO of GoviEx
in 2012. A mining engineer with 30 years of
experience, Daniel is leading GoviEx as it
transitions from exploration to production.
GoviExs shareholders include some of the
biggest names in the industry:
Denison Mines, a uranium exploration
and development company, chose to focus
on Canadian projects, so GoviEx acquired
Denisons African projects in exchange for
GoviEx common shares.
Toshiba Corporation owns Westinghouse
Electric Company, and their status as a major
reactor vendor makes them a valued share-
holder.
Cameco Corporation, one of the largest
uranium producers in the world, has been
part of the GoviEx story since 2008.
Ivanhoe Industries became a GoviEx
shareholder in 2015, bringing the support
of serially successful mining magnate Robert
Friedland.
urAniuM suPPly-deMAnd GAP
Forecasts predict growth in uranium demand,
as China and India build new reactors, Japan
re-starts their reactors, Europe maintains a
stable level of nuclear power generation, and
the U.S. becomes increasingly supportive of
nuclear energy. Low current prices mean that
new production cannot be incentivized, and
older uranium mines are reaching the end of
their life cycles. These factors are expected
to produce a supply-demand gap that should
drive the uranium price upwards.
www.goviex.com n
1
Certain scientific and technical information
disclosed in this article related to GoviExs projects
is derived from NI 43-101 compliant technical
reports, which may be found on GoviExs website at
www.goviex.com, or GoviExs continuous disclosure
documents, which have been reviewed and approved
by Dr. Rob Bowell, a Chartered Chemist of the Royal
Society of Chemistry, a Chartered Geologist of the
Geological Society of London, and Fellow of the
Institute of Mining, Metallurgy and Materials, who
is an independent Qualified Person under the terms
of NI 43-101.
The company paid consideration to SNN or its affiliates for this article.
MicroCap Review Magazine 79
 LIF E I N SUR ANCE COR N ER
NAIC Sees Life Insurance
as a Viable Solution to
Long-Term Care Costs
O f all the problems health care reform has tried to fix, long-
term care funding may be one of the most complicated.
With a growing population of aging baby-
boomers who need it, but havent prop-
erly planned for it, it leaves the governments
Medicaid program to pick up a growing tab.
In 2013, that meant Medicaid payments
accounted for 51 percent of long-term care
expenses or more than $155 billion, accord-
ing to a Kaiser Family Foundation report.
The result is that any cuts intended to fix
other problems in the health care system run
the risk of directly affecting seniors at their
most vulnerable.
But, there is one potential way to save
some of that taxpayer money. The National
Association of Insurance Commissioners
(NAIC), has advocated for a source of long-
term care funds that had never been seri-
ously tapped before: life insurance policies.
Specifically, an exchange of life insurance for
long-term care that has tax-advantages. The
NAIC Long-Term Care subgroup has issued
a policy report that included life insurance
as a tax-advantaged exchange for long-term
care for seniors who are struggling to pay for
their post-retirement care. This is done in
the secondary market, what many know as
the life settlement industry.
n BY CHRIS ORESTIS For those of us in the life insurance sec-
ondary market industry, this shift is tremen-
80 MicroCap Review Magazine
dous. For years, weve been fighting the good
fight, working to dispel the myths that have
loomed over this asset class. To help pro-
tect vulnerable seniors in this stage of their
lives, state insurance regulators put in place
stringent consumer protections, including
numerous consumer disclosures, disclosure
of all offers, broker commissions, and alter-
natives to selling a policy.
Here are the facts about an industry that is
growing in prominence:
The vast majority of life insurance
policies that are issued never result
in a benefit paid to beneficiaries.
An astounding 88% of universal life
policies are either lapsed or surren-
dered prior to a claim, according to
statistics cited by the Life Insurance
Settlement Association.
The life insurance secondary market
is designed to help seniors obtain
maximum value for life insurance
policies that are almost certain to
lapse or be surrendered.
Life settlements pay seniors an aver-
age of 4 to 11 times what they would
have received from the insurer for a
surrendered policy, according to stud-
ies conducted by the US Government
www.stocknewsnow.com
 Accountability Office (2010) and the
London Business School (2013).
At GWG Life alone, weve paid
seniors nearly $418 million to pur-
chase their policies over the past 11
years. Had those seniors surrendered
their policies back to their insurance
company, they would have received a
tenth of what they received through
GWG Life.
The proceeds from the sale of a life insur-
ance policy that is no longer needed or has
become unaffordable can provide seniors
with the liquid assets they need to fund the
increasing costs of long-term care. For many
seniors, a life insurance policy is the only
source of income available to address this
critical need.
As the only firm offering this kind of
swap, GWG Life has launched the LifeCare
Xchange Program (https://lcx.gwglife.com)
with solutions that include benefits exempt
from Medicaid spend-down requirements
that can be used in this way to pay for long-
term care and other health care costs. For
many seniors, a life insurance policy is the
only source of income available to address
this critical need.
Until now, broker-dealers who lacked the
resources or initiative to complete due dili-
gence regarding life settlements have kept
this important asset class off the menu for
the advisors. The July endorsement from the
NAIC is expected to change all that. Already,
GWG Life has partnered with a growing
number of advisors who understand that a
life settlement can be beneficial to seniors, as
well as to their practice.
These firms have done their diligence on
the secondary market and on GWG and
have authorized their advisors to introduce
life settlements to seniors. Some advisors are
holding local events to introduce the second-
ary market to new potential clients, as well as
to other financial services professionals. We
hope, for the sake of todays seniors, that this
momentum continues to grow.
Its important to note that life settlements
wasnt the only asset class discussed in the
www.stocknewsnow.com
The proceeds from the sale of a life insurance
policy that is no longer needed or has become
unaffordable can provide seniors with the liquid
assets they need to fund the increasing costs of
long-term care.
new report. Other options listed include Chris Orestis, Executive Vice President of GWG
Life (www.gwglife.com), is an over 20-year veteran
traditional long-term care (LTC) insurance, of the insurance and long-term care industries and
hybrid life and annuity products, single pre- is nationally recognized as a healthcare expert and
senior care advocate. He has been a featured guest on
mium permanent life insurance, annuity- over 50 radio programs and in The New York Times,
long-term care products, and impaired-risk The Wall Street Journal, USA Today, Kiplingers,
payout annuities. However, while traditional Investors Business Daily, PBS, and numerous other
media outlets.
LTC insurance was one of the most popular
products among seniors only a decade ago, About GWG Holdings, Inc.
rising costs have shifted that trajectory com- GWG Holdings, Inc. (Nasdaq: GWGH) the parent
company of GWG Life, is a financial services com-
pletely. According to the NAIC report, tra- pany committed to transforming the life insurance
ditional long-term care insurance sales fell industry through disruptive and innovative products
from 754,000 policies in 2002 to just 129,000 and services. The company has developed a new
a suite of options for the life insurance secondary
in 2014. As well, while more than 100 carri- market called LifeCare Xchange (LCX). This new
ers offered LTC insurance in 2002, by 2014, capability provides seniors with the exchange value
of their life insurance policies they can apply to
only about a dozen insurers were continuing long-term care and other post-retirement needs.
to offer LTC products. With LTC insur- GWG Life seeks to further transform the industry by
applying proprietary M-Panel epigenetic technology
ance options dwindling fast, recognizing life
to disrupt traditional life insurance underwriting
settlements as a viable, reliable alternative is practices. Since 2006 GWG Life has provided seniors
more vital than ever. over $418 million in exchange value for their life
insurance and, as of March 31, 2017, owned a portfo-
At GWG Life, our mission has always lio of over $1.4 billion in face value of policy benefits.
been to help consumers and the financial For more information about GWG Holdings, Inc.
emailinfo@gwglife.comor visitwww.gwgh.com.
services industry to understand life settle-
ments and the unique value they can offer to
seniors, especially to fund the rising costs of
long-term care and general healthcare. The
NAICs endorsement of life settlements as a
way to pay for long-term careand the fact
that the committees report specifically cited
GWG Lifes long-term care benefit plan that
we introduced to the market more than a
decade agofeels a lot like a big win weve
been fighting for. The best part of all is that
the real winners are those who are the most
vulnerable of all: seniors who are in desper-
ate need of a source of income to fund the
looming costs long-term care. Luckily for
them, the life insurance secondary market is
poised and ready to help. n
The company paid consideration to SNN or its affiliates for this article.
MicroCap Review Magazine 81
 F E AT U R E D A R T I C L E
Reg A+ Status Report: A+ or B- ?
Last year I wrote that everyone should still be cheering for the JOBS
Act and Reg A+, and not be surprised by the challenges it had faced.
At the time we only had one Reg A+ IPO
close and begin to trade. The company, Elio
Motors (OTC: ELIO), has struggled. Initial
shares were offered to the market at $12, and
the stock spent nearly six-months above $20,
before its slow decline to $6.04, where it is
trading as of this writing.
The result of Elios struggles and a lack of
new listings, Reg A+s perceived value has
been tarnished. Furthermore, the investment
bankers and lawyers that recommend deal
structures have started to question whether
Reg A+ is a viable vehicle for a company
seeking to raise investment capital. Not so
n BY MIGUEL COLON, MBA
82 MicroCap Review Magazine
says, Robert Kaplan, Jr. Managing Partner of
Kaplan Voekler Cunningham & Frank. Reg
A+, like most new regulations, is going to
take time. If you think back, it took a long
time for Reg D to be broadly adopted.
Despite Elios challenges, issuers do not seem
dissuaded from trying to raise capital via Reg
A+. 127 issuers have filed a Form 1-A over the
past 12-months, indicating their intent to raise
capital via Reg A+. Of those, 104 have been
qualified. While most of those qualified are in
the process of raising capital, only three have
closed and listed on a major exchange.
Myomo (NYSE MKT: MYO), a commercial
stage medical robotics company, started the
June Reg A+ IPO boom by offering shares to
the public at $5.00. The shares began trading
on the New York Stock Exchange MKT on
June 12th, shares traded as high as $23.19,
before settling to $12.43, as of this writing.
Daily trading volume has been an impressive
500,000 shares a day.
Adomani (NASDAQ: ADOM), a provid-
er of advanced zero-emission electric and
hybrid vehicles and replacement drivetrains,
quickly followed MYO and offered shares at
$5.00. ADOMs shares have traded consis-
tently traded near its 52-week high of $18.26
since its June 15th listing, with average daily
volume of a respectable 120,000 shares.
And last, but certainly not least is ShiftPixy
(NASDAQ: PIXY), a California-based staff-
ing company. PIXY offered its shares to
the public at $8.00, and began trading on
the NASDAQ on June 30th. The shares have
traded as high as $12.3, and settled to $9.22
as of this writing. Average daily volume in
excess of 1m shares daily is providing inves-
tors with ample liquidity.
The short-term results are hard to beat.
These three issuers are up a combined 100%.
Especially when you compare the returns to
this years two big traditional IPOs, Snap and
Blue Apron. Blue Apron went publicat about
the same time our Reg A+ companiid, but is
currently trading well below its $10 offering
price. Snap was a hit on its first day of trading
in March, but has since been trending lower.
As of this writing Snap was trading at $15.69,
7% below its $17.00 initial offering price.
So, what makes the latest Reg A+ IPOs
different than Elio? The first thing one
will notice is that these issuers elected to
www.stocknewsnow.com
 as iConsumer have met their minimum
and are actively seeking DTC eligibility and
the opportunity to trade. Quality offerings
from companies like Teraphysics, Muscle
Maker, Chicken Soup for the Soul, True Leaf
Medicine, and CapRocq Core REIT are in
the works, and may represent the next round
of listings. n

work with a financial advisor rather than forms to eventually be a conduit to Main Investors interested in finding information
Crowdfund on their own; Adomani worked Street investors, theyre not there yet. on the latest Crowdfunding listings can visit
with Boustead Securities, Myomo with For Jeffrey Karsh, CEO of stREITwise www.transfer.ly/CFofferings/
TriPoint Global Equities, and ShiftPixy REIT, the decision to not use an investment
Miguel Colon is the President of Transfer.ly, and
engaged WR Hambrecht + Co. Does that advisor all came down to investor returns.
a tenure tracked Professor of Entrepreneurship at
mean working with a BD is the secret to a We chose not to use broker dealers for dis- Chabot College. Prior to joining Transfer.ly Mr.
successful Crowdfunding IPO? Like most tribution because, even though they are gen- Coln held executive positions with Issuer Direct
Corporation including, Vice President of Corporate
great debates, it depends on whom you ask. erally effective at raising capital, the fees they Development and Head of EMEA. Miguel was the
According to Lou Fisi, CEO of Teraphysics, charge hasan considerably negative impact founder and CEO of SEC Compliance Services,
a full service XBRL and EDGAR provider. SEC
using an investment advisor was never a ques- on investors. Were trying to circumvent
Compliance Services captured significant market
tion. A Reg A+ is not any different than any the broker dealer network, thus saving our share in less than a year, which led to the purchase
other type of IPO. Therefore, conducting our investors that additional fee load. of its assets by Issuer Direct Corporation. Mr. Coln
received his Masters of Business Administration
offering in a traditional (with bankers) way Regardless of whether a BD is engaged (MBA) and Bachelors of Arts in Management from
made the most sense. When you consider that or not, the mini IPO boom doesnt appear St. Marys College of California.
there is a lack of IPOs in the marketplace, prop- to be ending anytime soon. Issuers such
erly incented investment advisors can make the
difference between a successful or not.
The analysis really isnt that complex,
says David Dobkin, President of Dobkin &
Co. and financial advisor to Teraphysics.
When you consider the cost of investor
acquisition relative to time and amount
invested, working with a financial advisor
makes pure economic sense. A good syndi-
cate will have trusted financial relationships
with 10,000s of investors ready to invest sig-
nificant amounts of money. Regardless of the
fee, its always to going less expensive to raise
$2.5m from 100 investors than from 10,000.
Robert Grosshandler, CEO iConsumer
sees it differently. iConsumers entire value
proposition is built on making every cus-
tomer a shareholder, and every shareholder
a customer. Broker Dealers are great, if
youre interested in institutional support
and investments from traditional Wall Street
investors. iConsumer is completely a con-
sumer-focused opportunity. We need many,
many shareholders to be successful. And
while I expect BDs, and Crowdfunding plat-

www.stocknewsnow.com MicroCap Review Magazine 83

 PROFILED COMPANY

84 MicroCap Review Magazine www.stocknewsnow.com

The company paid consideration to SNN or its affiliates for this article.
www.stocknewsnow.com MicroCap Review Magazine 85
 F E AT U R E D A RT I C L E
Will the Private Public
Joint Venture PPJV
Reinvent the PIPE Market?
T he Dow has been climbing at a breathtaking pace, reaching a
record high of 22,000, a significant jump from 17,000 in 2016.
Whatever the underlying assumptions
driving this growth, its clear that Keynes
Animal Spirits are running wild! This
economic improvement has had a impactful
cross over effect on the private equity mar-
kets, pushing valuations to sky high multi-
ples and leverage ratios to levels unseen since
the pre-crash hay days. Undeployed capital
chasing investments in privately held com-
panies has grown considerably. The question
n BY KARL B. DOUGLAS
86 MicroCap Review Magazine
is, Does this trend represent an opportunity
for MicroCaps- traditionally limited to dilu-
tive ATM and convertible debenture transac-
tions- to change strategy and achieve signifi-
cant high growth financing? And further,
what are the best structures to consider?
We believe the Private Public Joint Venture,
or (PPJVP is the structure MicroCap CEOs
and their Boards of Directors should explore.
Capital overhang in private equity is cur-
rently over $700 billion. Yes, thats correct
$700 Billion. Based on recent PIPE (Private
Investment in Public Equity) activity over
the last six months, some PE money is
crossing over into the public markets. And
yet, MicroCaps are still struggling to attract
capital at competitive terms.
According to Placement Tracker
(PlacementTracker.com), PIPE deal vol-
ume is down 2.8% (469 deals in H1 2016)
and dollar volume decreased a massive 44%
($27B in H1 2016). A logical analysis of
these numbers infers that PE managers have
two possible course of action: to start send-
ing money back to investors, or get more
creative.
PIPE activity was well distributed across
sectors, with financials leading the way.
Many of the sectors which are typical main-
stays of private equity are showing consider-
able activity. That includes the energy and
basic materials sectors, which typical repre-
sent a high concentration of MicroCaps.
Similar to 2016, the instrument types typi-
cally favored by PIPE investors have not
changed. Registered common equity and
ATM transactions have led the way. Both
tend to favor more mature companies with
market caps well in excess of $100M. These
companies have the daily trading volume
and VWAP profiles to allow companies to
finance with these types of instruments with-
out detrimental effect on share price. The
reality is that unlike the larger Small Cap
PIPE issuers, many MicroCap companies are
limited to selling shares at discounted prices
with warrant coverage, or selling convert-
ible debentures that convert at discounts to
market.
We picked a few random examples from
2017 to demonstrate the effect of each major
transaction type on sub $10M issues. Where
our analysis is not purported to be statisti-
cally accurate for each transaction type, we
highlight the results using common exam-
ples of public issuers to examine the impact
of certain structures. The companies select-
ed were chosen randomly, and all informa-
tion used was publicly available at the time.
Our conclusions are not buy or sell recom-
www.stocknewsnow.com

Figure 1 Placement Tracker August 2017
Figure 2 Yahoo Finance 6mo chart for MBII 8/11/2017
Figure 3 Yahoo Finance 6mo chart for REED 8/11/2017
www.stocknewsnow.com
mendations, nor do we have any opinion on,
or financial interest in, the specific issuers.
The first transaction type is a CMPO, or
Confidentially Marketed Public Offering.
Marrone Bio Innovations, Inc. Nasdaq CM:
MBII announced a $9,200,001 offering on
April 24, 2017. The offering was issued at a
20% discount to the companys share price
which at the time was $1.75. By August the
companys share price dropped to $1.11,
a 37% decrease. Without delving into the
specific operations of MBII, it is clear that
the combination of discount to share price,
and sudden increase in share volume created
a negative impact on price. This is a very
common story for MicroCap issuers.
In addition to CMPOs convertible deben-
tures have been a mainstay of the PIPE mar-
ket. We picked an offering that took place
on the same day as the MBII offering in a
different sector to demonstrate the effect.
On April 24, 2017, Reeds, Inc. (NYSE MKT
(AMEX):REED) announced that it raised
$3,400,000 in a Convertible Secured Notes
transaction. The fixed conversion price of
the Convertible Secured Notes was $3.00
per share, an approximate 36.84% discount
to the market price ($4.75 at the time) of
the REED deal announcement. A series
of 1,416,667 60-Month Warrants (125%
Coverage) with an exercise price of $4.00
per share (8.05% discount) was issued to the
investors in this transaction. As the chart
indicates, on August 11th, the closing price
of REED was $1.60, down 66%.
The two examples are representative of
the broader experience of illiquid MicroCap
issuers with traditional PIPE structures.
Clearly there must be a more effective way
for MicroCap issuers to raise growth capital.
When the status quo cannot go on we must
adapt, innovate or die. In this instance,
we believe the solution may lie in a strat-
egy wherein MicroCaps partner with private
equity, opening up access to the current $700
billion private equity overhang. This strat-
egy is particularly suited to companies pur-
suing an active M&A strategy such as data
center roll ups or mining consolidations.
MicroCap Review Magazine 87
Given the heavy commitment by PE to the
E&P sector, energy companies are uniquely
suited to the strategy.
This structure allows management teams
to execute their business plans and create
shareholder growth without excessive dilu-
tion or technical erosion of market cap
due to oversupply of shares with insufficient
liquidity. Over the years we have met hun-
dreds of MicroCap CEOs and their manage-
ment teams. In general, we see highly moti-
vated managers that could execute exciting
plans if only they were adequately capital-
ized. We believe the market is ready for a
new transaction type, the PPJV or Private
Public Joint Venture. The PPJV brings both
the public company issuer and the private
equity investor together in a symbiotic rela-
tionship that meets the requirements of both
worlds.
lets exAMine the Pros &
cons For the MicrocAP
oPerAtor:
1. Pros
a. Non-dilutive Pubco sharehold-
ers experience the benefit of
pubco share of the JV cash flow
without excess dilution.
b. Acquisitions are accretive to
pubco earnings.
c. Financial stability - Commitment
of long term deep pockets of the
PE company.
d. Easier access to low interest lever-
age.
e. Experience and expertise of PE
management particularly in the
M&A process.
f. MicroCap management team can
focus on building shareholder
value, and spend less time raising
money.
g. Access to higher quality investors.
h. Access to higher quality acquisi-
tion targets.
2. Cons
a. Non-consolidation of assets.
88 MicroCap Review Magazine
Generally speaking, the pubco
initially has a minority position,
and may not have board control.
However, this is not always the
case.
b. Potential double cost of man-
agement between Pubco and JV
management.
Pros & cons For the Pe
inVestor:
1. Pros
a. Built in exit option by electing
to convert JV equity interest into
shares of the Pubco, or through
phased divestiture, the PE inves-
tor has a built in public exit which
can be phased over time.
b. Higher exit value since the PE
company is converting, they are
eliminating the illiquidity spread
between private company and
public company valuations.
c. Greater financing flexibility a
properly executed pubco listed on
a major exchange offers cheaper
equity financing opportunities,
particularly in difficult credit
market cycles. Access to S3 shelf
registrations can be a tremendous
value.
2. Cons
a. Transparency depending on
structure of the JV, the PE com-
pany could end up with unwanted
transparency.
b. Higher costs depending on how
pubco costs are allocated, this
could reduce earnings at the JV
level.
We believe that the pros of the PPJV struc-
ture significantly outweigh the cons for both
issuer and investor alike. And this structure
could quite possibly become the next major
trend in MicroCap investment as the con-
cept gains popularity. With possible elimi-
nation of dilution, which has a detrimental
impact on public shareholders, we believe
the PPJV is a far more productive approach
for raising capital.
PPMT Capital recently attended the Planet
MicroCap conference in Las Vegas in April
and test marketed the concept with attend-
ees, including representatives from the min-
ing and energy sectors. We sat down with
Chris Jones, CEO of Uranium Resources,
Inc, (NASDAQ CM: URRE). Uranium
Resources, Inc. operates as an energy met-
als exploration and development company
and is developing lithium brine basins in
Nevada and Utah for exploration and poten-
tial development of lithium resources. Chris
felt that the PPJV would be an interesting
way to accelerate transition to production of
some of the companys larger reserves.
Jericho Oil Corporation, (OTC: JROOF)
is developing E&P reserves in one of the
most exciting basins in the US, the Stack
in Oklahoma. We were intrigued by the
knowledge that Jericho was already leverag-
ing the PPJV strategy with a strategic family
office relationship. As a prime example of
an early adopter, well be tracking Jericho to
see how the impact of the PPJV impacts their
development longer term. n
About the author:
Karl B. Douglas is a Managing Director at PPMT
Capital Advisors, Ltd.., a private investment and
advisory firm. Mr. Douglas has a career that spans
over 30 years investing in private and public com-
panies. PPMT Capital invests and structures 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
www.ppmtgroup.com
Note: This article is not an attempt to pro-
vide investment advice. The content is purely the
authors personal opinions and should not be con-
sidered 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.
www.stocknewsnow.com
 144Opinions.com
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MicroCap Review Magazine 89
90 MicroCap Review Magazine www.stocknewsnow.com
 F E AT U R E D A RT I C L E

Crowdfunding on the
Verge of Mainstream
A t the end of 2013 I was asked to predict what the crowd-
funding industry would look like in 2014.
I was energized, hopeful, bullish and insane-
ly naive. That said, I used all sorts of colorful
analogies to explain how the industry has yet
to be born. Still in utero, not even in diapers
yet, etc...
n BY ALON GOREN
At the time, a lot of my peers and col-
leagues took what I said as an insult. They
thought that by saying that what we had built
to that point wasnt even yet born, I was say-
ing that we hadnt accomplished much. The
truth is, regardless of the reasons (which I
believe were MOSTLY out of our control),
we hadnt. We had very little to show for
ourselves. What good is a product that
nobody uses?
But, I thought at least, that 2014 was
the year. Big things coming! Again, I was
insanely naive. I should have known better...
being in technology and finance I knew that
behaviors rarely change, and if they do, they
take many, many years to do so.
I believe that finally, that time has come.
I started launching social fundraising sites
in 2009. That was before PayPal could
even split a payment. Payment processors
like Stripe didnt exist. We needed escrow
accounts for the simplest forms of fundrais-
ing and even technology was a major hurdle.
Thats no longer the case. All those types of
products exist in many forms right out of the
box. Now its about orchestrating existing
products to fit your mold, versus building a
product completely from scratch.
Aside from technology and product hur-
dles being squashed over the years, the JOBS
Act passing created a new framework for sell-
ing securities over the internet. I wont dive
into the details that only an attorney could
help you dance around and the questions
that Google can easily answer, but the gener-
al idea is that regardless of which exemptions
you choose to raise under, now your private
company can publicly solicit and take money
from non-accredited investors. That is huge,
especially if you are already selling a product
over the internet. (Listen to my episode of
the Planet MicroCap Podcast with Bobby
Kraft!) What has been essentially created is a
much more streamlined and affordable path
to taking a company public.
OK, so the tech is ready and the regs are
now usable. So why is this not mainstream
yet?
Its just a matter of time..were on the verge.
In the last year weve seen multiple deals raise
millions of dollars and instantly list their
companies on OTC Markets, NASDAQ and
NYSE. Last year over 1,500 people came
to our conference, Crowd Invest Summit,
to meet and invest in crowdfunded deals.
Three of those deals are now publicly listed.
This year we expect that number to double. If
youre an investor or a potential fundraising
company, you need to be paying attention.
The time is now! n
Alon Goren is a pioneer in the financial technology
sector and a founder of Crowd Invest Summit, the
worlds largest Crowdfunding Conference and 805
Startups a group of over 2,000 investors and entrepre-
neurs in Southern California.
https://crowdinvestsummit.com

www.stocknewsnow.com MicroCap Review Magazine 91

92 MicroCap Review Magazine www.stocknewsnow.com
 TE
DA
E
TH
VE
SA Presented by SNN, Inc.

April 2426, 2018 at Planet Hollywood Resort & Casino, Las Vegas

Sponsorship Opportunities

As a sponsor, you will have the opportunity to showcase your companys products
and services to a select group of emerging growth company executives, investors and
finance specialists focused on the public MicroCap market and private markets.

Recognition as a Sponsor of Planet MicroCap Showcase in the conference marketing materials & event signage

Recognition as a sponsor of the Showcase main networking reception

Tabletop exhibition space in a premium location in Showcase main exhibit hall

Full access tickets for staff

Logo recognition in print and electronic advertising

Logo recognition & company description with link on the Planet MicroCap Showcase website

Logo recognition in post-event advertisement in MicroCap Review magazine

Full page advertisement in Showcase resource book

Opportunity to place literature on literature tables

Thank you to last years sponsors:

To learn more about sponsoring Planet MicroCap Showcase 2018, please contact
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@StockNewsNow / info@snnwire.com / 4242279018
 Aug Report July, 2017 adds & subtracts of FINRA Member Firms
Financial Industry Broker Dealer Data Aggregator compiled by DAVID ALSUP

July: 9 New formations & 12 Withdrawals

*New formations chart now shows Private Placement/RIA firms
(New Formations:Three-year average is 9.6 per mo. BDW three year average is 19.0 Closures per mo)

9 New Firms were admitted (Est) 12 Firms Withdrew
2 firms admitted are Private Placements 8 were equities firms
2 firms admitted are Mutual Fund Sponsors 2 firms were classified as Other
3 firms are classified as Other 2 were Private Placement firms
2 firms admitted are equities oriented All twelve of these firms had less than Ten reps
9 new RIA formations had over 10 Advisors One firm kept their RIA

Monthly New Formations chart showing the number & types of firms admitted

20
18
16
14
12
10 PP Pvt

8 Mut F, Other

6
4 EquiRes

2
0
12 14 9 10 15 9 11 11 7 8 7 6 7 10 9 8 4 9

Feb Mar Apr May June July Aug Sep Oct Nov Dec Jan Feb Mar Apr May June July

Monthly RIA FormaRons.

Blue is with BD aliaRon & Orange is without aliaRon

200
150
100
50
0
79 92 79 75 37 152 83 131 140 99 81 126

Aug Sep Oct Nov Dec Jan Feb Mar Apr May June July

As of July 31, 2017, there are about 3880 FINRA Member firm CRD Numbers.
There are now 12,505 SEC registered RIA firms (Means $100 mil in assets under management)
===========================================================================
The above data has been sourced from regulatory agencies publications' and statistics, along with some independent third parties. While it is believed to be
reliable there can be no guarantee of the accuracy of the data. The numbers have been cross-checked for accuracy, and they should be within plus/minus two
percent. For example, there may be as many as 15 firms NOT included in these statistics and NOT reported that filed for a BDW prior to July, 2017.

David Alsup 949-468-0111

david@fishbowlstrategies.com
94 MicroCap Review Magazine www.stocknewsnow.com
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www.stocknewsnow.com MicroCap Review Magazine 95

Accounting Corner Column on Page 69

Accounting Corner Column on Page 23