MicroCap Review Fall 2017

www.stocknewsnow.com $5.
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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
Delicious Flickr Twitter Retweet
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
www.stocknewsnow.com
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
Page 44 for Article
Page 24
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
that all Information presented in this issue is accurate and neither Micro- the Securities Exchange Act of 1934. All statements other than statements of historical fact are forward-looking statements for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and
objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Such forward-looking statements
Cap Review Magazine or any of its sta or authors is responsible for omis- of or concerning the companies mentioned herein are subject to numerous uncertainties and risk factors, including uncertainties and risk factors that may not be set forth herein, which could cause actual results to differ materially from those stated herein. Accordingly, readers are cautioned not to place undue
reliance on such forward-looking statements. This publication undertakes no obligation to update any forward-looking statements that may be contained herein. MicroCap Review Magazine, its owners, employees, affiliates and their families may have investments in companies featured in this publication, may
sions or information that is inaccurate or misrepresented to the magazine. purchase securities of companies featured in this publication and may sell securities of companies featured in this publication, at any time and from time to time. However, it is the general policy of this publication that such persons will refrain from engaging in any pre-publication transactions in securities of
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Micro-Cap Review is owned and operated by SNN Inc. not made any independent investigation of the accuracy of any such information and no warranty of the accuracy of any such information is provided by this publication, its owners, employees and affiliates. Pursuant to Section 17(b) of the Securities Act of 1933, as amended, in situations where the publisher
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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. 26 INVO Bioscience, Inc. 44 Finjan Holdings, Inc. 55 American Gene Technologies
OTC MARKETS: MRMD OTC MARKETS: IVOB NASDAQ CM: FNJN International
14 SRAX 27 PharmaCyte Biotech, Inc. 48 Teranga Gold Corporation Private Company
NASDAQ CM: SRAX OTC MARKETS: PMCB TSX: TGZ, 76 BNK Petroleum, Inc.
18 Lucara Diamond Corp. 28 RIWI Corp. OTC MARKETS: TGCDF TSX: BKX, OTC MARKETS: BNKPF
TSX, BSE, OMX: LUC, CSE: RIW & OTC MARKETS: RWCRF 50 Eskay Mining Corp. 79 GoviEx Uranium Inc.
OTC MARKETS: LUCRF 30 AzurRx BioPharma, Inc. TSX-V: ESK, TSX-V: GXU, OTC MARKETS:
24 Emerald Health Therapeutics, Inc. NASDAQ CM: AZRX OTC MARKETS: ESKYF GVXXF
TSX-V: EMH, OTC MARKETS: 42 Clean TeQ Holdings Limited 84 Reign Sapphire Corp.
EMHTF 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

P R O F I L E D C O M PA N Y
otc MArkets: MrMd
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- bis cultivation, production, and distribution.
erendums were forcing states Lastly, the companys licensed and branded
to implement medical mari- products under the name Kalm Fusion, as
juana programs, Robert Fireman and Jon well as retail design experiences providing a
Levine formed MariMed Advisors to capital- full range of expertise.
ize on the opportunity. Their vision was to The legal cannabis market is poised to
bring professional management, standard grow beyond $21.8 billion by 2020, at a
operating procedures, and Best Practices CAGR of 25%. *(New Frontier). 29 states
have some form of legalized cannabis; 16
states have laws that allow for CBD use; and 7
to the hodge-podge cannabis industry. states have fully legalized cannabis for adults.
They believed a more grounded eastern The public markets are supporting cannabis
approach would be a foundation for a suc- companies in both the United States and
cessful company that could compete with Canada. Cannabis programs are now begin-
the cannabis companies coming from the ning in countries such as Germany, France,
wild-west. Netherlands, Israel, Australia, Uruguay,
MariMed believes cannabis may be one Columbia and more.
of the most important medicinal plants on
earth and has the power to transform human ProFessionAl exPerienced
health and wellness. Our business practice MAnAGeMent teAM
is to preserve cannabis valuable essence
and future promise through strict opera- While industry insiders see a continued
tional management of the entire legal seed- skyrocketing pace for expanding the medical
2-consumer experience, explained Robert cannabis market, its worth watching where
Fireman, MariMeds CEO. leaders have emerged to get a good sense of
The Managed Services practice of what is to come. * (New Frontier)
MariMed includes multi-dimensional The key to capturing a meaningful share
advisory services from real estate location of the growing legal cannabis market will
selection through full business operations fall to skilled executive management teams
including; licensing, compliance, security, with a proven and diverse cross-section of
systems integration, day-to-day operations, business disciplines that provide meaning-
technology, and human capital. Secondly, ful accountability and operational expertise.
the company offers real estate and equip- MariMeds team consists of senior execu-
Robert N. Fireman, Esq., CEO
ment investment capital to fast-track canna- tives in law, finance, real estate, agriculture,

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
Thrive Anna Dispensary, Illinois success.
security, management, product develop- The MariMed team developed the Thomas At the Forefront of
ment, sales, marketing, and merchandising. C. Slater Compassion Center in Providence Medical Research
Several members of the team provide vast Rhode Island in 2012. It is viewed as a model
experience in cannabis and the universal of excellence for other cannabis facilities MariMed, is committed to developing prod-
subculture that is still at the roots of this throughout the country. Following a defined ucts steeped in the latest medical research
movement. business plan this 50,000 sq. ft seed-to-sale and clinical studies, and is always looking
Robert Fireman, MariMeds CEO, entrepre- facility presently services over 17,000 medi- to produce and deliver safe cannabis to the
neur and attorney envisions the MariMed plat- cal cannabis patients. Following MariMeds thousands of patients with debilitation ill-
form as a total solution for the development playbook, its processes, procedures, and pro- nesses. MariMed team members support
and operation of state regulated, compliant tocols are replicable and scalable. MariMed efforts to provide CBD medicine to parents
cannabis facilities. Jon Levine, Marimed CFO adheres to strict disciplines and processes of epileptic children under the care of their
manages all financial operations including; considered proprietary for how it manages pediatric doctors. MariMed also supports
contracts, license compliance and security, cultivation and production at its clients state implementation of state sponsored cannabis
human resources, capital, banking, real estate regulated facilities. Managing the yield and trials that may positively affect veterans with
services, and MariMeds public reporting. operations of large commercial cultivation PTSD, patients suffering from pain, MS,
Timothy Shaw, Marimed COO is the logistics facilities takes an extraordinary amount of Parkinsons and other diseases.
guru across all operating systems and partner- agriculture business operations experience, MariMeds philosophy is to provide the
ships, integrated cultivation efficiencys, safety, stated Timothy Shaw Marimeds COO. highest quality products, service, and exper-
production systems, product development, MariMed has been most successful writing tise that insure the integrity of a pesticide
vendor management, product satisfaction, and winning applications and developing success- free and organic cannabis product that is
operating compliances. ful cannabis businesses for its clients. Examples reliable, predictable, and dosage specific, said
Best Practices to Design, Develop, and include; Timothy Shaw, MariMeds COO. Developing
Operate Cannabis Facilities. 2015: The First State Compassion the infrastructure required to deliver consis-
In 2012, the medical cannabis industry was Center, another 50,000 sq. ft. seed-to- tency for legal cannabis medical products is
still fighting the widespread fog of stoner cul- sale facility in Wilmington something the company takes seriously and
ture and stigma. To combat this perception, 2016: Opened Thrive Anna Dispensary where MariMed leads.
the team utilized tried and true business expe- in Illinois MariMed has a strategic agreement with
rience and practices creating strict protocols, 2016: Opened Thrive Harrisburg Tikun Olam, USA, to market Tikuns pro-
extensive training, and efficient operations. Dispensary in Illinois prietary genetic cannabis strains, backed
We made smart decisions early and continue 2016: Awarded Massachusetts byover 10 years of clinical trials and research
to execute our vision, stated Robert Fireman Provision Medical license for ARL from Israel for expansion into multiple legal
MariMeds CEO. Healthcare for cultivation, production cannabis states. We believe Tikum Olams

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
Innovative, all-natural Kalm Fusion products capital raise of $5,150,000. These funds
were used to fund the construction of a
second dispensary in Delaware, the comple-
clinical trial data, patients, and proprietary include California, Illinois, Nevada, Oregon, tion of the cultivation facility in Nevada, and
genetic cannabis strains provide MariMed Washington, Massachusetts, Arizona, and the ongoing development of new integrated
with the most advantageous product offering Maryland. The Company expects to have medical cannabis facilities in Maryland.
with proven efficacy the market has to offer distribution access for Kalm Fusion products MariMed is in the process of filing an S1
said Robert Fireman CEO. in over 5000 dispensaries. Registration to continue to raise capital to
support its continued growth. These new
kAlM FusionAll-nAturAl the work And business funds will be used to acquire real estate for
ForMulAtions driVe Model Are showinG results developing additional cannabis facilities in
Growth both Maryland and Massachusetts along
Over the last five years, MariMed has qui- with strategic marketing programs across the
Launched in 2016, Kalm Fusion was created etly won state marijuana licenses in Rhode entire MariMed ecosystem. With expected
to provide patients with an all-natural line Island, Delaware, Massachusetts, Illinois, higher revenue, and profit, plus hard real
of cannabis products. With zero artificial or Nevada, and Maryland. estate assets the company goal is to be up-list
synthetic ingredients, Kalm Fusion provides The Company enjoyed revenue growth of to NASDAQ by 2019.
an array of easy-to-carry, low dose products 180% year-over-year reaching $3.5 million
in both THC and CBD formulations. These during 2015 and 2016. Real estate revenue For more information:
include; Mari-Melts sublingual strips, Mari- and management fees increased from $1.270M www.marimedadvisors.com
Mints, Kalm-Corn a microwave popcorn, and to $3.564M during this term. Revenues for the info@marimedadvisors.com
Kalm FIZZion effervescent tablets. six months ended June 30, 2017 more than Stock Ticker: MRMD n
The Company has an aggressive research doubled from the same period in 2016 , from
and development program to expand the $1,261,896to $2,771,776.. This significant
Kalm Fusion brand. One exciting new prod- increase was primarily due to MariMeds
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
The company paid consideration to SNN or its affiliates for this article.
ATE
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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 and NASDAQ, a major Microcap as well as financial crises regarding
GROUP T-REPORT crest will probably result in a high states, cities, pensions, student loans,
volatility ratcheting downward car loans, individual debt, and more, a
in brieF trend leading to a long term bottom, reflection of extreme optimism among
with a probable low in 2020 or so bankers, thus greed is perceived as
Major Takeaways Until more definitive index market eternally profitable, while risk/fear is
Russell Microcap Index has recently action takes place that allows for call- and shall remain nonexistent!
broken out of a six month near side- ing a high probability end of the 2009 Extreme and historic optimism is
ways consolidation, made a new all- bull trend and a lasting crest, a move typically evidenced in markets that
time high and remains in a confirmed under the February 2016 low will are perceived to be trending to the
uptrend but is subject to corrections, confirm the long term trend to down; moon, only to find out that markets
as it moves on its own time table until then the trend is up really do not grow nor trend to the
toward an anticipated historic crest moon financial gravity pulls them
Select technical indicators, stock mar- To well establish these takeaways, this back to reality!
ket cycles and Elliott Wave analysis Cornerstone Global Group (CGG) Technical Indeed in recorded history, there has
are suggesting a short term top in Report will comment on the economic and been an upward bias in USA equity
July/early August 2017, followed general market outlook as well as the markets but they have always been
by a decline into September/early Russell Microcap Index weekly chart and punctuated by minor and major
October and a major top later in conclusion: resets in excessive optimism and atti-
October/November 2017 tude that ultimately leads to finan-
There is always that possibility of new econoMic And MArket cially destructive behavior in govern-
monetary or fiscal manipulation that coMMentAry ments, companies and households,
could postpone the top until no later ultimately resulting in a painful reset
than mid-2018 but the market will From a long term historical perspective, The good news is the cyclical reoc-
have its way in due season remem- most USA equity markets continue to reflect curring resets reduces excess debt
ber, the global markets are bigger and a LONG TERM topping process of a 250 and capacity, which brings forth
more powerful than any central bank year cycle: a new spring season of economic
or government renewal as well as a new secular
Given this is a USA 250 year equity The new historic highs in microcaps, equity bull market, along with slow-
cycle topping process, more spe- small caps and large caps reflect his- ly rising rates and inflation
cific time line and Index objective toric exuberance of extreme opti-
updates will be forthcoming as mar- mism, resulting in extreme compla- AnAlysis And coMMents:
ket action becomes more definitive cency among market participants,
As anticipated in the DJIA, S&P 500 thus greed is perceived as eternally The above weekly Index chart clearly
profitable, while risk/fear is and shall indicates Index is above both its 200
remain nonexistent! week and 50 week Simple Moving
This collective investor attitude or Averages, thus the trend is up
mood is due in part to historic low Anticipating a short term top in July
rates, brought on by an accommo- early August; such a top may be
dating central bank and lenders in imminent if Index does not make new
general, exasperated by few invest- highs while the DJIA and S&P 500 are
ment alternatives, all of which are BTW, that is happening today, 14 July
n BY STEVEN M. SHELTON, fueling fiscal irresponsibility, lead- 2017 but one day does not denote a
MS, MBA, CFP, CLU, CHFC, TEP, ing to a rising USA national debt of change in trend
CIMA, CMT $19,848,342,893,093 as of 13 July 17 Beware that a very reliable technical

Weekly Russell Microcap Index chart
cial services publishing entity and Managing Partner

indicator, Relative Strength Indicator Conclusion
of Shelton Farms and Enterprises LLC
(RSI), is exhibiting bearish negative
divergence in both the daily, weekly Historic tops are coming to USA DISCLAIMER:
Cornerstone Global Group LLC, 3240 North Lake
and monthly charts equity indices, to include the Russell Shore Drive, Suite 11-D, Chicago Illinois 60657, pro-
When such is noted on a daily chart, Microcap Index vides institutional consultancy on financial services
marketing, distribution and product/service develop-
a decline of some magnitude is in the The exact timing is always an
ment to and for institutional use only.
making sooner than later unknown but just as storm clouds
When such is noted on a month- appear before a potential thunder- Cornerstone Global Group LLC is also the newslet-
ter publisher of the CGG Global Market Technical
ly chart, it is indicative of a major storm, so will there will be technical Report, CGG Technical Research Notes and other
decline but given its monthly, the indicators that will alert those aware publications, all of which are informational services
and may include opinions as to buying, selling, hold-
decline can be months out and vigilant of a potential historic
ing various securities, asset allocation and strategies.
In essence, all indications are that top and decline However, Cornerstone Global Group LLC, its own-
the microcap index is headed for an The great news is that such a top and ers, employees and consultants are not investment
advisers. At no time may a reader, caller, viewer or
eventual major top and substantial decline is a once in a lifetime oppor- consultancy client be justified in inferring that any
decline, which suggests vigilance as tunity to profit from such action as advice is intended as investment advice or as invest-
ment recommendations directed to any particular
to timing of a trend change well as to protect wealth for retire-
person or in view of the particular circumstances of
NOTE: the Russell 2000 small cap ment and the next generation! n any particular person. Investing carries risk of losses,
index has much more market his- and trading futures or options is especially risky
Steven Shelton is a Financial Services veteran of more because these instruments are highly leveraged, and
tory and such history has noted that traders can lose more than their initial margin funds.
than 30 years, having served in senior management
after each market rise from 1998 to in both the insurance and broker/dealer community, Before investing consult with your investment advi-
on and off shore. He has expertise in economics, sor. Additionally, Cornerstone Global Group LLC
2000 and 2002 to 2007, the index has
financial market analysis, wealth management, tra- does not render tax, accounting or legal advice and
returned to its origin; that would sug- ditional and alternative investments, financial plan- the information contained in this communication
gest a potential decline of the Russell ning, marketing, insurance, sales and consulting as should not be regarded as such. Information pro-
well as an international speaking regarding global vided by Cornerstone Global Group is expressed in
Microcap Index to around 130-150 good faith but is not guaranteed in any way.
economics and financial markets. This is evidenced
for a major low by advanced degrees in business administration and
Lastly, historically market crashes economics as well as six professional designations
to include, Certified Financial Planner, Chartered
tend not occur at the top of the mar- Life Underwriter, Chartered Financial Consultant,
ket but come later in an already estab- Certified Investment Management Analyst, Tax and
Estate Practitioner and Chartered Market Technician.
lished downtrend, just as the DJIA
He is the Managing Member of Cornerstone Global
and S&P 500 did in 1987, 2000, 2007 Group LLC, an Institutional consultancy and finan-

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.

Solutions for a Growing ad targeting at the point of care can impact
Multi-Vertical Market patient outcomes in a meaningful way, says
DeRuggiero.
With proprietary machine-learning software Her conversations with pharma-brand
that maximizes performance and profits for customers solidified that theres a big gap
brands and content owners, SRAX has a between what they are trying to achieve
solid footing in a market valued at approach- through digital and mobile ad targeting and
ing $32 billion. In fact, programmatic digital whats available in the marketplace. We
display ad spend is set to grow exponentially, set out to close that gap with our health-
reaching 82 percent of total digital display ad care IT products, DOCTRAX, DOCTRAX
spend by 2018, according to eMarketer. MATCH, DOME and MOSEE, to meet
SRAX thrives in this environment by the needs that arent addressed by agencies
engaging a diverse customer base developed and ad tech companies, added DeRuggiero.
from both sides of the programmatic market: In this context, healthcare IT products are
marketers (buy-side) and content owners and innovation within the digital healthcare the most advanced verticals served by the
(sell-side). space. SRAX digital media management platform.
For brands, agencies and buy-side part- SRAXmds core customers, pharmaceuti-
ners, SRAX maximizes returns on digital cal companies, didnt have many options to Social Data and
inventory across devices in real time. For choose from when it came to reaching their Programmatic Technology:
website and mobile application owners, intended audience on desktop and mobile The Winning Combination
influencers and other sell-side partners, devices. The industry standard of reaching
SRAXs programmatic technology ampli- doctors by buying ads in specific medical While most companies now use social media
fies content monetization and overall digital journals or apps was limited in scale. to gain customer insight and generate brand
marketing performance. Recognizing the need to reach physicians awareness, few have been able to marry this
We designed our tools to improve perfor- with a timely deployment of ads triggered by to the advantages offered by programmatic
mance across all digital channels for brands an outside event (like a diagnosis, a potential and RTB technologies.
in any vertical, says Miglino. This solid foot- relapsing patient or a rejected insurance Over the few years SRAX has succeeded in
hold with prominent agencies serving vari- claim, for example), SRAXs Co-founder and developing solutions that directly meet this
ous verticals healthcare, auto, consumer CIO Erin DeRuggiero, developed a solution need: SRAX Social, SRAX App and SRAX
goods and sports represents a significant that goes beyond what most advertising Reach The company has continued to build
opportunity for the company in the digital agencies and tech companies are able to out recurring revenue streams on both sides
space since each could evolve into a stand- deliver. of the business with ongoing development
alone business. Our ability to deliver display and video and enhancements to differentiated propri-
The companys vertical-forward strategy ad messages directly to a healthcare pro-
is exemplified by the success of its SRAXmd viders handheld device has been pivotal to
product. In August 2014, The SRAXmd our success and continued growth. When
healthcare platform came to life to service a you service clients who manufacture first
market need for true advertising automation and second-line cancer therapies, real-time
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.

SRAX Reach - SRAX Reach, is a cus-
On June 28, 2017, SRAX announced the launch of tom ad unit that enables marketers to buy
beyond the banner, says Miglino. SRAX
a new social boosting tool for digital marketers and Reach combines display ads with native
content owners to create posts and promote them premium advertising, imagery and story
content to deliver a compelling brand expe-
beyond their Facebook Page communities. The rience in a single industry standard unit.
Marketers can even pull in existing content
tool is the first of numerous planned monetization directly from their brands social channels.
opportunities developed and integrated into the Ad Technology Built for

SRAX Social platform. Today and Tomorrows
Market
etary technology that enables its clients to Finally, marketers and content owners across
unlock social data. verticals can do more with the data they
SRAX Social - SRAX Social is a social already have. SRAXs custom advertising
media management platform that uses pro- programs are built to perform utilizing
grammatic technology and big data to share, core technologies and generating recurring
schedule and automate social media content. revenue streams for each client.
On June 28, 2017, SRAX announced the The success of this approach is demon-
launch of a new social boosting tool for strated by the companys continued strategic
digital marketers and content owners to cre- growth. With a focus on targeted higher
ate posts and promote them beyond their gross margin revenue, SRAX has significant-
Facebook Page communities. The tool is ly improved its bottom line. Management is
the first of numerous planned monetization also excited about the new product verticals
opportunities developed and integrated into auto and sports that it launched in the
the SRAX Social platform. third quarter.
SRAX App - Recognizing the potential of Very few companies have tackled the idea
the growing mobile opportunity, Miglino segments, for example, males ages 25 to 40, of fusing social and programmatic technol-
guided the development of the companys who live in the U.S. and have an interest in ogy. And yet, SRAX is opening new doors for
SRAX App product. With SRAX App, adver- stock car auto racing. They can collect loca- the advertising world proving that its pos-
tisers are able to automatically aggregate tion data to deliver push notification mes- sible to develop products that meet clients
social media feeds and online content chan- sages and launch promotions and exclusive needs today while anticipating the future of
nels into an app. Using the product, they can content all to increase brand engagement the industry. n
target valuable interest-based niche audience and loyalty.
On the web:
www.srax.com
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.
R E A L E S TAT E C O R N E R
Gold with a Coupon Theyre not making more of it.
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 in the equity market. Faced with the prospect ceres FArMs llc intro:
of Farmland, we are specifically talking about of a bear market in equities, farmland has
U.S. row crop farmland which grows primar- proven highly effective providing diversifica- Ceres Farms acquires properties and leases them
ily corn, soybeans and wheat used in livestock tion during major drawdowns in the broader to local farmers who grow corn, soybeans, wheat
and poultry feed. These are commodities market. Farmland returns are driven by fac- or specialty crops such as vegetables on a sched-
for which global demand is growing nearly tors (crop prices, increased animal protein uled rotation. Ceres is especially proud of the
two times faster than productivity, but for consumption in developing world, etc.) which extensive network of experienced farmers that it
which it is difficult and expensive to add do not affect other asset classes. In the last has teamed up with to create a proven partner-
new capacity (acreage). The result in most recession, when the S&P lost 46% from Q3 ship where all parties benefit. Ceres currently
years is tight supplies and high prices. Row 2007 to Q1 2009 and virtually all other asset owns over 300 farms consisting of 99,000 acres
crops are distinct from (but often conflated classes drew down, Farmland gained 18%. across ten states. At June 30, 2017 Ceres Farms
with) permanent crops (almonds, vineyards, Second, interest rates are rising and the had total assets of $611 million. Ceres Farms
orchards) which have much greater volatility Fed is expected to continue to raise rates for investment objectives are to provide income,
and include a host of different risks associ- the next 12-18 months at least. Farmland is and capital appreciation, with low volatility and
ated with owning a biological asset (trees and an income generating asset but it does not low correlation to other asset classes. n
vines) vs. owning dirt. trade on yield like commercial real estate
Perry Vieth, is CEO of Ceres Partners that manages sev-
or other institutionally held real assets. We
eral agriculture focused funds including Ceres Farms, a
why FArMlAnd now? estimate institutional investors comprise less diversified portfolio of U.S. farmland with over 300 farms
than 5% of the purchases in the market. and 99,000 acres in ten states. Formerly Perry served for
ten years as Chief Investment Officer at PanAgora Asset
First, many investors are increasingly worried The other 95% of the market is farmers, and Management in Boston, and he also served as a portfolio
about the next recession and about valuations farmers dont trade farms on yield as inves- manager at Fleet Investment advisors, Fuji Securities and
Chicago Research & Trading Group where he began
tors do. Farmers trade farms based on the
his trading career at the Chicago Mercantile Exchange
economics of growing crops, and the bullish in 1986. From 1982 to 1986, Mr. Vieth practiced law
impact of $5 corn would overwhelm any in Chicago specializing in securities and corporate law.
He graduated from the University of Notre Dame Law
bearish impact of 5% treasuries. School with a J.D. and obtained a B.S. in accounting
Finally, and perhaps most compelling, in from Marquette University. He is a Chartered Financial
Analyst and member of the Boston Securities Analyst
the face of high equities valuations and ris-
Society. Perry serves on the University of Notre Dame
ing interest rates putting pressure on asset Law Schools Advisory Council and several charitable
values, farmland is at the bottom of its cycle organizations Board of Directors.
n BY PERRY VIETH and is poised for recovery. www.cerespartners.com


P R O F I L E D C O M PA N Y tsx, bse, oMx: luc, otc MArkets: lucrF
lucara diamond corp.

L ucara Diamond Corp. is a Canadian diamond min-
ing company with a producing mine and prospecting
licenses in Botswana.
With its head office in Vancouver, Canada, inVestMent hiGhliGhts
Lucara is a member of the Lundin Group of
Companies. Founded over forty years ago Producer of an extraordinary number
by mining magnate Adolf H. Lundin, and of large gem quality Type IIa diamonds:
now headed by his son, Lukas H. Lundin the 131 diamonds have sold for >
Group has garnered a reputation of being US$1 million each (Total value
one of the most recognized and respected in excess of $520 million)
groups in todays global resource industry. 21 diamonds for > US$5 million
The Group operates in over twenty counties each
worldwide and across a variety of commodi- 7 diamonds for > US$10 million
ties, with Lukas H. Lundin as the Chairman each
of many of the group companies, including 93,499 carats of +10.8ct dia-
that of Lucara Diamond Corp. monds recovered as of end of
Lucara has a strong, highly experienced Q1 2017
management team, lead by William Lamb, Recovery of approximately 20% of +300
the Companys President and CEO. William carat stones ever recorded - including 2 of
has over 23 years experience in mining and the worlds largest gem quality diamonds
operations in Canada and several Southern (position number 2, the 1,109 carat Lesedi
African countries, including 13 years with La Rona diamond and position number 6,
De Beers working across their operations the 813 carat Constellation diamond)
in Southern Africa and Canada focusing on Average diamond value achieved in
heavy mineral concentration, project devel- 2016 was US$824 per carat, four years into
opment and operational readiness. William Karowes approximately 15-year mine life
joined Lucara in 2008 and was instrumental Revenue guidance for 2017 is $200 -
in the acquisition of the AK6 asset, and $220 million (exclusive of Lesedi La Rona)
developing it into Lucaras wholly owned, Progressive Annual Dividend of
principle asset - The Karowe Mine. CDN$0.10 for 2017 (a 47% increase over
Through its 100% owned subsidiary, 2015) due to strong cash flow generation
Boteti Mining (Pty) Ltd., Lucara markets and and balance sheet
sells rough diamonds from its sales office in Organic growth potential through
Gaborone, Botswana through Regular and expansion of resource, exploration of sur-
Exceptional Stone tenders to an interna- rounding prospecting licenses and through
tional customer base in compliance with the M&A
William Lamb, President & CEO Kimberley Process Certification Scheme.

Diamond mining and the trade of diamonds recognized the requirement to address the
has transformed the country into a middle- production throughput risk identified in the
income nation. In 2016, diamond sales and feasibility study, that being hard and higher
production represented approximately 33% yielding (increased DMS load) kimberlite
of Botswana GDP (approximately US$3.3 at depth. An additional risk that became
billion). apparent was the consistent recovery of very
Lucaras Karowe Mine, then the AK6 large and high value diamonds above the
Kimberlite, was discovered by the De Beers maximum size limit for which the process
group of companies in 1969. After many and recovery circuits were designed.
years of sitting idle, advanced exploration To mitigate these risks, a number of plant
was conducted on AK6 from December 2003 upgrades were initiated during 2014. The
through May 2007 by Boteti Mining (Pty) upgrades included the introduction of a
Ltd. (then Boteti Exploration Pty), through large diamond recovery circuit, designed
joint venture partners De Beers Exploration to recover large diamonds prior to major
and African Diamonds (AFD). This crushing of ore, additional crushers to liber-
advanced exploration revealed that the AK6 ate diamonds from the hard fresh kimberlite,
Kimberlite was larger, and of higher grade and additional X-ray Transmission (XRT)
than previously estimated. In 2009, Lucara technology to process the higher yield mate-
Lesedi La Rona Diamond 1,109 acquired an initial 70% interest in Boteti rial at the desired throughput.
carat Type IIa from De Beers Exploration, then holder of The plant upgrades allowed for an increase
a 100% interest in the AK6 Project, and in in diamond size recovery from 30mm to
Although still in its infancy as a diamond 2010 increased its interest to 100% through 90mm (approx. 2,500 carats).
producer, Lucara has been making history as the acquisition of AFD. In Q3 2015, immediately following the
one of the foremost producers of large, high In 2010, Lucara completed a feasibility commissioning of the new plant and incor-
value gem quality diamonds accounting for study on the AK6 kimberlite, indicating a porating XRT technology, Lucara recov-
approximately 20% of all +300 carat stones 15-year life of mine, based on an open pit ered what is currently the second largest
on record, and achieving some historical mine plan, to a depth of 324 m on the tri- gem quality diamond ever recorded the
prices for its rough diamonds, including the lobate kimberlite pipe (North, Central and 1109 ct Lesedi La Rona diamond and
sale of the 813 carat Constellation diamond South lobes, respectively). The combination within 24 hours of this historical recovery,
for $63.1 million in May 2016 the highest of advanced exploration and the completed Lucara recovered the sixth largest gem qual-
price per carat ever received for a rough dia- feasibility study resulted in an NI 43-101 ity diamond every recovered the 813ct
mond. (all dollar amounts are in US Dollars, report, an indicated resource from surface Constellation Diamond as well as a 374ct
unless otherwise stated). to a depth of 400 m of 51 mt containing gem quality diamond.
Karowe has an annual production of 8.2 million carats; and an Inferred resource In 2016, the Company undertook the deci-
approximately 300,000 carats, including from 400 m to 750 m of 21 mt containing 4 sion to increase its recovery size capacity, and
large, high value gem quality diamonds, and million carats. The mine plan was based on initiated another processing plant upgrade
generates approximately US$200 million in a Probable reserve from surface to a depth including a Mega Diamond Recovery circuit,
annual revenues - excluding the sale of any of 324 m of 36.2 mt containing 6.3 million its purpose being the recovery of value as
truly exceptional diamonds. carats. This led the Company to a construc- early as possible in the process plant thus
The Karowe Mine and Boteti Mining (Pty) tion decision. Construction of the Karowe reducing the possibility of breaking large,
Ltd. operate in the country of Botswana Mine was completed in Q1 2012, with com- extremely valuable diamonds. Using the
- one of Africas most stable mining juris- missioning and ramp up to full operational highly successful XRT technology incorpo-
dictions and the continents longest con- capacity completed in Q3 2012. rated in the first process plant upgrade, the
tinuous multi-party democracy. Botswana Mega Diamond Recovery system is intended
is one of the worlds largest producer of MINING AND PLANT UPGRADES to recover diamonds in excess of 90mm,
diamonds, with a history of diamond explo- and up to 120mm in size (approx. 5,000 car-
ration dating back to 1954 when De Beers Subsequent to the commissioning of the ats). Commissioning of the Mega Diamond
began prospecting for diamonds in, the then Mine during 2012, the processing plant Recovery upgrade is anticipated to be com-
British Colony, Bechuanaland Protectorate. performed successfully. However, Lucara plete in Q3 of 2017.

resource uPGrAde And and its Karowe Emerging Entrepreneurial
exPAnsion AnnuAl diVidend Fund. Since 2012, Lucara has re-invested
PAyMents since approximately 65% of its revenues back into
Results from its early stage production, as iMPleMentAtion oF A Botswana through taxes, operating and proj-
well as the recoveries from the upgraded ProGressiVe diVidend ect costs, procurement, and by employing
plant, led the Company to a decision to Policy, in 2014. 96% of its workforce from Botswana.
further test the AK6 Kimberlite at depth. In
Q4 of 2016, the Company initiated a 10,000 2014 CDN$0.04/share the diAMond MArket &
m deep drill program with a goal to bring 2015 CDN$0.04/share lucArA
inferred mineral resources into the indicated Introduction of a progressive
category. The drill program, completed in dividend policy Despite challenging Diamond Market con-
Q1 2017, is designed to increase confidence 2016 CDN$0.06/share (a 50% ditions in 2016, Lucara generated record
in the geological model for the south lobe of increase from 2015); revenues of $295.5 million or $824 per carat,
the AK06 kimberlite and provide sufficient plus a special dividend of paid $149.7 million in dividends (including
data and material for an updated resource CDN$0.45/share a CDN$0.45 per share special dividend in
to be utilized in an underground option 2017 CDN$0.10/share anticipated July 2016), and reached its US $1 Billion in
study for the Karowe mine. The updated (YTD 2x quarterly payments of diamond sales milestone.
resource for the current inferred portion CDN$0.025 ea.) The Company is confident that it has the
of the Karowe Mine is expected to be com- production profile to withstand downturns
pleted in Q4 2017. in the general diamond market. The Karowe
In addition to a potential resource upgrade favourable position of becoming the first mine production differs from its peers due to
the Company is also involved in exploration Lundin Group Company to pay dividends to the coarse nature of the diamond population
activity. In 2014, the Company was awarded its shareholders. With its strong cash flow and the consistent recovery of high quality
two precious stone prospecting licenses that generation and strict investment criteria, Type IIa diamonds which have resulted in a
are known to host the BK02, AK11 and Lucara has rewarded shareholders with its strong client following.
AK12, AK13 and AK14 kimberlites. The dividend, continues to advance its explora- Lucara recovers a significant number of
prospecting licenses are located within a dis- tion program and resource expansion work +10.8 carat gem quality diamonds. Over
tance of 15 km and 30 km from the Karowe at Karowe and retains the potential for M&A the past 4.5 years of operations, and as min-
mine. activity. ing has started to focus on the south lobe
AK11 - During Q2 2017, the Company In the three years since implementing its which constitutes the majority of mining
initiated a large diameter drilling (LDD) progressive dividend policy Lucara has made in the years to come, greater than 65% of
sampling program at the AK11 kimber- approximately US$200 million in dividend Lucaras revenue has been derived from 5%
lite. Drilling has commenced on the pilot payments to its shareholders - more than of its production volume. This places Lucara
drill-hole aspect of the program. Material the total sum of equity ever raised by the in a relatively unique position in the dia-
recovered from the LDD samples will be Company. mond market, as the Karowe production is
processed at the Companys Bulk Sample These dividend payments equate to impacted less by downturns when compared
Plant located at the Karowe Mine. approximately 20% of its gross revenues to to other production profiles.
AK13 - During Q2 2017 logging and sam- date, and have provided attractive dividend
pling of AK13 was completed and microdia- yields in comparison to its peers and the For more information on Lucara Diamond
mond samples shipped for analysis. Results broader mining sector. Corp., contact Investor and Public Relations at:
are expected during H2 2017. Email: info@lucaradiamond.com
sociAlly resPonsibility Tel: 604-689-7842:
lucArA PAys diVidends www.lucaradiamond.com n
Lucara not only pays dividends back to its
The revenues generated through Regular shareholders, they re-invest in Botswana and
and Exceptional Stone tenders have gener- their employees, making strong contribu-
ated strong cash flows and balance sheet tions in local communities through the pay-
for Lucara. Within its first two years of ment of taxes and royalties and by developing
full production, Lucara found itself in the businesses through the Lundin Foundation
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

OPINION
Cannabis Q&A with

Adam Selkin
M
r. Selkin has 20+ years of expe- Shelly Kraft: How long have you been being completely obscure, working under
rience in capital markets and in the cannabis sector? and what is your the radar, and not having business models
banking with microcap compa- experience? to becoming more focused on real cannabis
nies. He has spent the last five years focused Adam Selkin: Since the election cycle in opportunities in and around the industry,
on the cannabis industry and built a can- 2012 I have been looking at the public can- with real business models and quality man-
nabis practice. He has a vast network of cannabis sector. I have been in and around can- agement teams to execute. Today there are
nabis relationships and has experience in nabis my entire adult life, have many friends many established companies trading publicly
investment banking, business development, that own and operate business in various within a huge ecosystem from agriculture,
and mergers and acquisitions. states, and most of them actually began on medical marijuana, edibles, infrastructure,
the black market. When I was in high social media, recreation, entertainment and
Shelly Kraft: Whats your background? school and college I traveled around with vastly growing and diversified industries.
Adam Selkin: I have been on Wall St. since the Grateful Dead and Cannabis became
1996. I started off as a retail stockbroker at a passion of mine forever. In about 2013, Shelly Kraft: How would you suggest an
Oppenheimer, then Smith Barney until I went my analyst at Chardan suggested we make investor build a portfolio in cannabis
into Capital Markets and Institutional Sales cannabis a focus at the firm as it became stocks?
and Banking at CE Unterberg Towbin in an emerging sector in the public markets Adam Selkin: My opinion is of course to
2005. In 2008 my partners and I began because it seemed a change was coming in do extensive due diligence, seek professional
the Special Equities Group, a division a progressive political environment out of advice, read trade reviews and newsletters
of Chardan Capital Markets where we were Washington D.C. and stay informed. I would diversify within
responsible for financing and marketing At that time, what my analyst did not the cannabis space. My suggestion would
of microcap companies for the firm. We know, is that my personal desire to under- be to look at a couple of different buck-
were consistently in the top 3 performers in stand much more about the industry was ets: Healthcare/Biotech, Technology, Retail
thePIPEstables. already brewing since my nephew suffers & Cultivation and Products and Services to
from epilepsy, and as a family we were the industry.
searching out the possible benefits of treat-
ing him with cannabis. Chardon was the Shelly Kraft: What are some downside
very first FINRA approved firm on Wall risks to investing in cannabis stocks?
St. to write research and raise money for The cannabis stocks can have extreme vol-
cannabis related businesses and companies. atility and struggle for financing.With news
Massroots was our first cannabis related deal going back and forth on the legalization/
and we raised them their first money in con- prohibition front, public cannabis companies
junction with becoming a public company. tend to be very volatile in price/volume and
trade on general industry news surrounding
Shelly Kraft: How has the sector trans- cannabis versus the fundamentals of their
formed over the last several years? business.
Adam Selkin: The cannabis sector has
started to transform into a true emerging For more information: Adam Selkin:
market. The cannabis companies in the www.slee3.com n
public market have in a sense gone from

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
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
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
complex and difficult, the Financial Accounting derivatives is inconsequential to most readers. includes, at a minimum, an input and a sub-
Standards Board (FASB) has updated two The FASB update will allow companies to stantive process that together significantly
areas of accounting that may offer reporting exclude a down round feature when determin- contribute to the ability to create output.
relief for micro and small cap companies. ing if a financial instrument (or embedded This change to the definition of a busi-
Recently, the FASB simplified accounting conversion feature) should be recorded as a ness is likely to result in more acquisitions
requirements for companies that issue equity- derivative. Companies will instead recognize being accounted for as asset acquisitions in
linked financial instruments (e.g. convertible the value of the down round feature when it all industries. This is extremely important
debt or convertible preferred stock, or war- is triggered (that is, when the strike price has as it makes the accounting for these types
rants) with down round features, which will been reduced). This is great news as it now of transactions much simpler. It could also
substantially reduce the number of derivative will eliminate one of the most complicated, eliminate the costly expense of employing an
liability instruments that have become com- and some will say most distortive, aspect of outside valuation firm in assisting with the
monplace on the balance sheet of small cap accounting currently faced by companies. purchase price allocation in recording the
companies. The FASB also narrowed the defi- While some of the analysis required initial purchase, and also could eliminate the
nition of a business, providing a new frame- under current accounting will be eliminated, need for continuing impairment testing of
work for making reasonable judgments about preparers will still be required to perform the acquired goodwill and intangibles going
whether a transaction involves an asset or a detailed analysis to determine if instruments forward that is required under the old rules.
business. This is important because it should are to be classified as equity or liabilities (e.g. One potential issue worth noting is that the
simplify the accounting for certain acquisitions sufficient authorized shares, fundamental SEC definition of a business is not affected by
that were formerly considered a business. transaction clauses, etc.). the change in the FASBs definition of a busi-
ness. An asset purchase under GAAP that is
deterMininG deriVAtiVe deFinition oF A business deemed a business by the SEC may require the
liAbilities clAriFied company making the acquisition to submit past
audited financial statements of the business in
Under current Generally Accepted Accounting This FASB change affects the definition of a Form 8-K, whereas if it were an acquisition of
Principles (GAAP), when an equity-linked acquisitions, disposals, goodwill, and con- an asset, audited financial statements may not
financial instrument with down round features solidation. Generally, in an acquisition of a be required. It remains to be seen if the SEC will
is issued, the embedded conversion feature business, assets and liabilities acquired are adopt the same position as the FASB. If it does,
is usually required to be separated and rec- recorded at fair value and goodwill is recog- this may significantly reduce the need for the
ognized as a derivative liability, with changes nized for any excess consideration. Assumed costly presentation of prior year audited finan-
in the fair value of the derivative recorded in contingencies are typically recognized and cial statements of the acquired asset.
earnings each reporting period, making the measured at fair value. In an asset acquisi- Accounting and disclosure rules are com-
measurement of these derivatives complex and tion, the acquired asset is recorded at cost, plex, cumbersome and often difficult in appli-
costly. In addition, many users of financial goodwill is not recognized, and contingen- cation. Please consult experienced auditors or
statements have suggested that this accounting cies assumed are recorded only if probable. consultants before entering into transactions. n
In January 2017, the FASB narrowed the
Corey Fischer, CPA, is Firm Managing Partner of
definition of a business and provided a new Weinberg & Company, a multi-office, PCAOB and
framework for making reasonable judgments CPAB-Registered firm specializing in the audit, assur-
ance and tax needs of micro and small cap companies.
about whether a transaction involves the
He has more than 25 years of experience, having worked
acquisition of an asset or a business. FASB with the Big 4 accounting firms, and as an SEC report-
clarifies that when substantially all the fair ing officer for a number of NASDAQ-listed companies.
Based Los Angeles, he is an expert in financial report-
value of the gross assets acquired (or disposed ing, SEC compliance, raising debt and equity, mergers
of) is concentrated in a single identifiable and acquisitions and structuring accounting operations.
E-mail: coreyf@weinbergla.com or 310-601-2200.
n BY COREY FISCHER, CPA asset or a group of similar identifiable assets,
www.weinbergla.com

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- the holy GrAil oF cAnnAbis

listed Canadian company from laid-back is FinAlly within reAch
British Columbia, rather than a deep-pock-
eted US corporate powerhouse. Canadas largest industrial-scale cannabis
Until recently, Emerald Health growers have lately been jostling for pole
Therapeutics (TSX.V: EMH) (OTCQX: position in the race to capture the lions
TBQBF)has been best known for being an share of Canadas looming legal recreational
R&D incubator of proprietary intellectual market.
property in the race to innovate cannabis- Early-market entrants will have an unprec-
based medicinal therapies. edented opportunity to earn brand loyalty
Now this small Victoria-based cultivator among as many as an estimated eight mil-
of pharmaceutical-grade cannabis is throw- lion Canadians approaching 25% of the
ing down the gauntlet to its much larger population.
rivals. In fact, this mainstreaming of cannabis
Emerald Health has announced plans to consumption is expected to be worth up
become Canadas most dominant cannabis to CDN $10 billion a year, according to
grower. This involves a shrewd leveraging investment industry analysts. And this new
strategy. Indeed, it appears to be an opti- marketplace will open up as early as next
mal template for scaling-up production in summer.
a big way, which can be achieved at a rela- So the small handful of big players among
tively low-cost and on an expedited timeline. Canadas industrial-scale growers are already
More on this in a moment. trying to out-do one another in the run-up to
First, investors need to know whats ulti- the end of decades of prohibition.
mately at stake. They have each announced grandiose
plans for growing vast amounts of pharma-
ceutical-grade cannabis in an assortment of

new high-tech facilities. These operations Ultimately, this allows the company to facility in Victoria will continue to focus
will involve modular structures ranging in develop value-added downstream products on R&D, manufacturing oils and servicing
size from several hundred thousand feet to namely cannabis oils on a massive medical patients.
as much as one million square feet. The big- scale. Which is very shrewd because sales of
gest of them will cover an area larger than 20 cannabis oils in Canada are virtually dou- Investment Synopsis
football fields. bling every 90 days.
What all these in-development facilities In fact, investment industry analysts fore- Emerald Healths joint venture partnership
have in common is that they will each cost cast that consumption of cannabis oils in with Village Farms is a game-changing dif-
around CDN $100 million dollars (or even Canada will expand exponentially for many ferentiator; it will allow them to capture
more) to build to full capacity. Also, each years to come, especially with the advent of a significant market share in a multi-billion-
of them will take a year or longer to com- recreational market. dollar recreational marketplace for cannabis.
mission. Dr. Dhillon comments, Were already To this point, Emerald Health is commit-
However, Emerald Health is taking a faster positioning ourselves to be a world-class ted to becoming one of Canadas lowest-cost
and less risky approach to scaling-up in a leader in innovating value-added down- producers, which promises to be an enor-
significant way. 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
Why Bigger is Better growth will be the mass-production of high-
Targeting the Multi-Billion margin cannabis oils.
Emerald Healths founder and Executive Dollar Pain Management Due to the fact that this business model
Chairman of the Board, Dr. Avtar Dhillon, Market can be rolled-out cost-effectively and with
is a former family physician. He is also part reduced execution risk, investors are pre-
of a US-based family business that is one of Dr. Dhillon is determined to make Emerald sented with a compelling value proposition.
Californias largest cultivators of fruit and Health a key player in Canadas burgeoning
vegetables. So he benefits from consider- big-dollar medical marijuana market. www.emerald.care n
able expertise in the science and logistics of Within months, his company intends to
achieving impressive economies of scale. launch gel capsules with consistent dosage
In Canada, Dr. Dhillons apparent mas- levels of cannabis oils that will meet Health
ter stroke involves his companys recent- Canadas strict standards.
ly announced decision to team up with In particular, the companys scientists are
Village Farms International Inc. (TSX: using advanced plant genetics to develop
VFF). Headquartered in Greater Vancouver, optimal cannabis strains and cannabis oils
Village Farms had sales of around CDN $206 that can be dialled-in to treat specific types
million in 2016. It is also North Americas of pain and sleep disorders.
largest technologically-advanced, low-cost According to Dr. Dhillon, By targeting
grower of supermarket produce. the requirements of healthcare providers
This strategic alliance means that an exist- consistent dose, quality manufacturing,
ing network of sophisticated greenhouse oral delivery, and clinical evidence we
growing facilities will be re-purposed to pro- will engage the medical gatekeepers to sup-
duce recreational cannabis a much more port and expand the use of our medicinal
profitable venture. products.
Village Farms will initially contribute up This steadfastness to the companys core
to 1.1 million square feet of existing state- competency can be seen in Emerald Healths
of-the-art greenhouse capacity to the 50/50 undertaking to develop 100,000 square feet
joint venture partnership. of state-of-the-art, indoor growing facilities
All told, as much as 4.8 million square feet in Greater Vancouver. The new operation
of greenhouse infrastructure can ultimately will also include a laboratory to incubate the
be retrofitted to cultivate cannabis via this companys intellectual property, specifically
arrangement. This could yield up to 300,000 plant genetics.
kilograms of dried flower cannabis annually. The companys existing pilot growing

PROFILED COMPANY otc MArkets: iVob
inVo bioscience, inc.
I NVO Bioscience, Inc. offers the worlds newest reproductive technology

to help millions of infertile couples receive treatment.
homeland of France, lost electricity while Reproductive Technologies) and a major U.S.
doing an egg retrieval on a patient. Since his thought leader, began offering INVO cycles
incubators were without power, he needed to along with a few additional early adopters.
find a way to keep the eggs and sperm from The outcomes were excellent.
dying so he placed the eggs and sperm in a INVO Bioscience launched into the U.S.
small cryo-preservation tube and inserted fertility market at the American Society of
the tube in the females vaginal cavity to keep Reproductive Medicine (ASRM) Congress
them at body temperature. Later when he in October of 2016. The company, since this
removed the cryo-tube from his patient, he initial launch, has trained physicians and
discovered that there were nicely formed embryologists in over 50 IVF centers to offer
embryos inside, hence discovering intravagi- the procedure at approximately half the cost
INVO Bioscience is a small public company nal culture (IVC) of gametes. of IVF.
(IVOB) that has developed a low cost, effi- The company went public via a reverse Currently, the Company is continuing the
cient alternative to In-Vitro Fertilization merger in late 2008 to raise money to sup- expansion of INVO across North America,
(IVF). The INVO procedure, using the port the development, regulatory approv- despite limited resources. The companys
INVOcell device, is a game changing, revo- als and launch of the new medical device mission is to provide the INVO procedure to
lutionary process that is currently launching that could be user friendly for physicians those that previously could not afford or had
in the United States. It has demonstrated the for the IVC procedure. In early 2010, the access to fertility care. In additional to selling
same pregnancy rates and birth outcomes as Companys stock was driven down to pen- the devices to physician, INVO Bioscience is
traditional IVF at approximately half the cost nies by an original reverse merger inves- looking at plans to partner with physicians to
of traditional IVF. The procedure, with the tor. To prevent dilution by selling penny open INVO centers in areas where the cost
newly FDA cleared device, has begun pen- shares, the Company struggled to continue and availability of IVF makes it unattainable
etrating the IVF market with more than 50 the development of the INVOcell and secure for most couples. This will even further
clinics now offering the procedure. Fertility FDA clearance with little to no funds, paying grow the Companys market share opportu-
procedures are generally not covered by vendors with restricted stock and taking no nity as well as serve patients who otherwise
health insurers, therefore they must be paid salaries for themselves. would not be treated.
by the patient out of pocket. The huge cost Despite the lack of significant funding,
of IVF has limited 88% of couples needing the company received FDA approval in www.invobioscience.com n
fertility care in the U.S. from obtaining preg- November 2015 through a DeNovo applica-
nancy and having a baby. INVO Bioscience tion inclusive of 450 clinical cycles proving
with its new technology is solving this prob- the INVO process was equivalent in efficacy
lem. and safety to IVF. A limited product launch
Dr. Claude Ranoux and Kathleen Karloff, was initiated in 2016 with a few key physi-
the current CEO, founded INVO Bioscience cians to assure the device procedure worked
in 2007 to develop a device that could be well in a commercial environment before a
utilized to commercially implement Dr. full launch was initiated. During this time,
Ranouxs discovery of Intra-Vaginal Culture Kevin Doody, MD, who is currently the
(IVC). Dr. Ranoux, while practicing in his President of SART (Society of American

PROFILED COMPANY otc MArkets: PMcb
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.
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,
While the company has a number of cellular living cells depending on the disease being 250-patient trial with 125 patients in
therapies in its product pipeline, includ- treated. For its leading product candidate, each arm. The trial will be conducted in
ing therapies for locally advanced, inoper- pancreatic cancer, about 10,000 genetically the U.S. and Europe by premiere oncol-
able and non-metastatic pancreatic cancer modified live cells that produce an enzyme, ogy CRO, Translational Drug Development
(LAPC), type 1 and insulin-dependent type which converts the chemotherapy prodrug (TD2). The company has selected Dr.
2 diabetes, all abdominal cancers, and a ifosfamide into its cancer-killing form, are Manuel Hidalgo, the Clinical Director of the
cellular therapy using cannabinoids to treat encapsulated in porous, pinhead-sized cap- Rosenberg Clinical Cancer Center and Chief
cancers of the brain and other hard to treat sules. About 300 of these capsules are placed of the Division of Hematology Oncology
solid tumors, it is the companys therapy for in the blood supply as close to the pancre- at Beth Israel Deaconess Medical Center in
pancreatic cancer that is PharmaCytes lead- atic tumor as possible, and then one-third Boston, to be the Principal Investigator.
ing product candidate. the normal dose of the chemotherapy drug
After meeting with the FDA in early is given to the patient intravenously. The www.pharmacyte.com n
2017 to discuss its upcoming clinical trial prodrug is normally activated in the patients
in LAPC, PharmaCyte began preparation of liver. By activating the prodrug using the
an Investigational New Drug application to Cell-in-a-Box capsules, PharmaCytes cel-
request a pivotal clinical trial be approved to lular therapy acts as a type of artificial
address a critical unmet medical need in the liver. Using this targeted chemotherapy,,
pancreatic cancer communitya therapy PharmaCyte is creating an environment that
for LAPC patients that no longer respond enables optimal concentrations of the can-
to the current standard of care, Abraxane + cer-killing form of ifosfamide at the site of
gemcitabine. PharmaCytes Chief Executive the tumor. Because ifosfamide has such a
Officer, Kenneth L. Waggoner, has sur- short half-life, it results in little to no col-
rounded the companys technology with lateral damage to other organs in the body
three of the leading oncologists in the world and significantly reduces tumor size with no
in developing therapies to treat pancreatic treatment-related side effects.
cancer - Dr. Daniel Von Hoff; Dr. Manuel The goal of PharmaCytes upcoming clini-
Hidalgo; and Dr. Matthias Lhr. Together cal trial in LAPC is to show that the com-
they designed the clinical trial to position panys cellular therapy for pancreatic can-

cse: riw & otc MArkets: rwcrF
riwi and the next

Generation of Global
Applied Analytics
E
ver since my graduate work at Since the 1990s, the public has become tizing the enormous data the Company could
Harvard studying the misery accustomed to unreliable, unscientific opin- obtain that had nothing to do with market
after a pandemic or terrorist ion data from online panel surveys, where research but with what is now called applied
attack, Ive been fixated on one problem: people earn rewards or cash in exchange analytics, a $150 Billion annual market that
How do you obtain scientifically reliable, for opinions about political candidates or enjoys the highest premium pricing in Big
random and predictive data about peoples products. By the mid-2000s, social media Data since it offers businesses continuous
true fears, actions and behavior from any- analysis was even less reliable than panels as machine learning for the broadest possible
where in the world? asks Neil Seeman, a way to assess changing public sentiment. range of insights. For example, the Company
the founder and CEO of RIWI Corp. (CSE: Then, in 2006, Neil and his brother Bob could uniquely help government agencies
RIW). were studying new advertising models of measure whether an operation in a war zone
For example, how do you know whether website domain addresses (like woma.com). was meeting its objectives, or whether peo-
people will see a public health safety mes- Thats when Neils business epiphany came. ple were witnessing corruption among pub-
sage and then take a vaccine so they dont RIWI was born as an idea I sketched lic officials. Between me, my brother, and
spread a lethal virus? Will a video mes- on my infant daughters erasable marker Alton Ing the Chief Technology Officer in
sage campaign about the brutality of ISIS art easel in 2006, Neil says. My brother, the research unit that I ran at a College I
work to stamp out violent radicalization? an expert in website domain names, had couldnt think of a trio who knew more about
Until RIWI, the Internet has been unable to been seeing erratic trends in website adver- how to build out the technology for this
answer these questions. tising revenues. Even though he owned amazing opportunity, states Neil.
great websites, we knew we werent going to RIWI incorporated in 2009 and was at
become billionaires by selling ads online. So the side of his desk as cool and disruptive
I showed him a crude algorithm on the art but Neil says that he didnt chase enterprise
easel about how we could access millions clients until mid-2012.
of rotating websites in real-time from any Even though the Company had solved the
country to intercept people randomly and in barrier-to-entry risk through strong intel-
a scientifically representative fashion and get lectual property, building strong data and
opinions from people who dont post online technology partnerships, and through prov-
or participate in survey panels. We did lots ing out the technology in academic studies
of cool stuff, including predicting the fall and in client use cases, it needed a strategic
of Mubarak during the Arab Spring, which investment without turning to offers from
earned us immediate attention in the inter- dilutive Venture Capital.
national security sector, says Neil. So Neil pitched the idea to his founding
Someone had to eat into the margins of shareholders, Robert Pirooz and Ross Beaty,
the large polling and market research firms, the well-known entrepreneurs and investors
Neil L. Seeman BA, J.D., MPH ,
so why not me? Neil also felt there was a of Pan American Silver fame (TSE: PAA),
Founder and CEO massive first-mover opportunity for mone- and they jumped on it. They hammered

home the importance of keeping things lean. Our technology won us increasing atten- is one year, the average engagement is two
The Company hired a small management tion, and so did our prediction for finance years, with upper-level contracts of 5-15
team with proven expertise across four busi- clients of the election of President Donald years. It is expected that these contracts will
ness lines: consumer research (with a focus Trump, as well as our research with Oxford range in size from $2MM to $30MM.
on emerging markets); global development and University of Manchester academics on We aim to be the Booz Allen Hamilton
research (contracting in long-term agree- the turnout model that would decide Brexit. (NYSE: BAH) of global applied analytics,
ments with governments and with prime We were also the only Company to predict serving government agencies and global
contractors to G7 nations); international the stunning, precise margin of defeat for the consumer firms looking to understand
security; and global finance. The Company Italian constitutional reforms in December product uptake, usage trends or geopolitical
discovered the best way to scale was through 2016. risk triggers in any part of the world, says
long-term agreements and monthly sub- Capital formation needed to align with Neil.
scriptions, Neil says. the Companys business strategy and be as The Company not only charges for its
Our marketing, capital formation and non-dilutive as possible, Neil adds. A pub- unique services in a highly cost-effective
business strategy then fell into place quickly. lic listing gave us flexibility: given that costs manner, but it also charges additional fees
We needed a business strategy that leveraged associated with increased sales in long-term for the number of users on the RIWI plat-
the financial benefits of long-term agree- agreements were low for RIWI, going public form. The applied analytics industry, under
ments and could capitalize on our marquee on the CSE without a raise made sense. RIWI all the Companys four business lines, is
clients, such as the Bill & Melinda Gates is now a popular microcap with enormous large and growing: it includes the evaluation
Foundation, Harvard University, the United scalability, great backers, strong governance, budgets of roughly half of one percent of the
Nations, the World Bank, and the US State the opportunity to cross-list onto major US GDP of every G7 nation; the roughly $45
Department. Marketing in three of our four exchanges when ready, and to accept tactical Billion (est. 2.2% year-over-year growth) in
target sectors was relatively easy since cli- private placements from hedge funds (which the annual market research spend; the grow-
ents in security, the development sector and occurred in April 2016) and from strategic ing multi-trillion dollar efforts to combat
finance work in tightly knit communities. investors. terrorism globally; the growing number of
The Company found marketing more RIWI has advanced its technology into an quantitative-driven hedge funds devoted to
challenging for consumer insights work. Information-as-a-Service (IaaS) and global better understanding changing geopolitical
Even the prestigious awards from the mar- applied analytics firm. It has engaged more risk in all parts of the world; and growing
ket research industry that the Company than 1 billion people in the world to collect return-on-investment analytics critical to
won could not raise the awareness it needed message testing data, behavioral reaction the ever-rising (now more than $223 Billion)
in that sector. RIWI is a five-time win- data, and survey data. The ongoing machine worldwide annual digital advertising spend.
ner of the Top 50 Most Innovative GRIT learning and data feeds provide clients, in One final part of RIWIs path forward
award, the 2013 IIeX Disruptive Innovation customizable dashboards and in an extreme- is turning on its investor-relations engine
Award and is a winner of the coveted Next ly wide array of data file formats, continuous so that more than just the Companys tight
Generation Market Research Award. When applied analytics, not just data dumps. RIWI investor base and people close to the data
the Company struck a sales partnership with is perfectly poised for explosive growth since sector know about the Companys growth
the leading Japanese research firm Cross it is only using a fraction of one percent of trajectory and vision. Weve been under
Marketing Inc. (TO: 3675) in Tokyo, market- the Companys processing capacity and its the radar from a capital markets perspec-
ing across Asia was easier. RIWI discovered software scales horizontally to manage mas- tive. Thats going to soon change, says Neil.
it needed to focus mostly on long-term sive demand. RIWIs big agenda is growth. What will never change is our commitment
opinion trackers in the topic areas that the That means gaining more long-term agree- to solving some of the hardest data chal-
Company was the best in the world at, such ments, more key accounts, and becoming lenges in the world to serve our customers
as highly sensitive topics (e.g., hypertension more of a direct supplier to governments, in with a vital, increasingly intelligent data and
prevalence, attitudes toward ISIS, or recre- addition to being a sub-contractor to more analytics stream that is otherwise unavail-
ational marijuana use market sizing), or top- major organizations such as Freedom House, able in the global marketplace, he adds.
ics that required the opinions of huge num- for which RIWI is the sole digital data sup-
bers of Millennials, especially men under plier in a consortium with a five-year agree- www.riwi.com n
35, a key demographic that online panels, ment to the US Agency for International
telephone surveys and social media analytics Development (USAID). Management aims
increasingly couldnt reach. to move rapidly such that a short contract

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

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
Figure 2: Daily Dose MS1819 vs. Standard of Care PERT - Illustrating
trials in EPI patients associated with CP
Expected Substantial Reduction in Pill Burden and Size
Source: Company reports.
and CF.
90% of children with CF may develop EPI, ity in acidic environments like the stomach; AzurRx BioPharma Pipeline
according to researchers at the University require a high number of pills be taken daily
of Toronto. This is particularly dangerous leading to non-adherence; and are derived AzurRx BioPharmas other pipeline candi-
as malnutrition may affect growth patterns. from porcine, which carries a risk of trans- date is AZX1101 -- a recombinant-lactamase
CF patients often require 20 50% more mission of pathogens and manufacturing combination of bacterial origin aimed at
fat-based caloric intake because of malab- inconsistency. prevention of hospital-acquired (nosoco-
sorption. AzurRx BioPharmas MS1819 Lipase is mial) infections by resistant bacterial strains
a non-systemic, yeast derived recombinant induced by parenteral administration of
Current Treatments and enzyme being studied for the treatment of -lactam antibiotics as well as the prevention
MS819 EPI in patients with CP and CF that offers of antibiotic associated diarrhea. The U.S.
the potential to fulfill critical unmet needs Centers for Disease Control and Prevention
The current treatment for most patients for these patient populations. To date, early (CDC) has estimated that roughly 1.7 mil-
with EPI, usually involves lifelong pancre- research shows superior stability for MS1819 lion hospital-associated infections (~5% of
atic exocrine replacement therapy, or PERT. lipase at relevant intestinal acidic pH ranges, hospitalized patients) cause or contribute to
The goal of PERT is to help manage patient favorable safety and efficacy profiles, and 99,000 deaths per annum in the U.S., with
malabsorption, by providing the patient with decreased daily pill burden compared to an annual cost of $4.5 11 billion. AZX1101
pancreatic enzymes derived from animals. porcine pancreatic extract lipase. is in early preclinical testing and consists
However, several challenges exist to treat Following regulatory approval in Australia of a combination of two -lactamases hav-
EPI as currently available treatments offer and New Zealand in 2016 to conduct a Phase ing complementary activity spectrum. The
limited effectiveness due to their instabil- 2 multicenter 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
Figure 3: AzurRx Product Pipeline

Source: Company reports.

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- victory, the executive order that served as
gest driver of the stocks in 2017 is likely the foundation of the legal cannabis industry
to be potential changes in the federal poli- suddenly looked like quicksand.
cy towards enforcement of the Controlled Indeed, federal policy has been the biggest
Substances Act. Under the Obama driver this year, with the sector peaking in
Administration, states which complied with late February after extending the gains of
the 8 tenets of the Cole Memorandum issued 2016 but then retreating after an off-the-cuff
in 2013 were permitted to operate state-reg- remark by Sean Spicer suggested a potential
ulated cannabis programs. With the Trump change in how the Trump Administration
n ALAN BROCHSTEIN

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

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.

with approval. FDA approval is the only way
the drug could ensure consistent dosing, Canadians have a constitutional right to medical
potency, and availability across the country.
With scheduling change however, it is pos-
cannabis, and are less likely to be impacted by the
sible for all medical use of cannabis undergo
scheduling changes in the US. As such, medical
FDA approval (albeit potentially via a less
rigorous 505(b)(2) pathway), in which case, marijuana seems to be protected in Canada.
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 By contrast, the US market is vastly frag- CBD companies? The likes of Charlottes
of one or more cannabis drugs remains to mented even though we have a much larger Webb, and ETST? A lot of them just white
be seen. population. Considering the projected price label their own brands, and the extracts
drop of cannabis plant, vertically integrated are purchased. These opportunities are too
Invest in Canada cannabis businesses are key. Also, any busi- thinly spread, and if there are contractions
nesses that counter the price drop by cost in the space, the ones with strong brand
Canadians have a constitutional right to savings make agricultural technology very staying power will survive but largely uncer-
medical cannabis, and are less likely to be interesting: Increasing efficiency, reduce tain. n
impacted by the scheduling changes in the electrical use, reduce labor costs by automa-
Dr. Lauren Chung
US. As such, medical marijuana seems to tion, and reduce capex spending by increase
Managing Director, Healthcare Research
be protected in Canada. Also, the laws in in growing efficiency, ie more harvesting
Canada are more straight forward, ie, a draft time per year (or yield per year) without Dr. Lauren Chung serves as a Managing Director in
Healthcare Research, and has more than 16 years of
guidance of legalization has been released losing terpene development. As such, what equity research and investment management experi-
and full enactment is expected mid2018. would be archaic going forward would be for ence in the biotechnology and healthcare space.
Prior to joining WestPark Capital, Dr. Chung
While currently medical marijuana cannot a need to build massive acres of grow houses.
served as a Senior Equity Analyst at Maxim Group
make any claims, in the long run, it is pos- Because aggregate of these considerations is focused on healthcare companies. Previously, Dr.
sible for Health Canada to approve certain vast, one way to efficiently invest in the can- Chung provided consulting services related to
healthcare investments and various strategic and
claims. In the meantime, it is important for nabis business in the US is via funds such operational planning for healthcare companies and
the sponsors to commit to physician educa- as MedMen, or an investment vehicle such investment firms.
Dr. Chung was a Co-Founder and Chief Operating
tion. Meaning, further genetic testing could as iAnthus Capital (ITHUF), that directly
Officer of Tokum Capital Management, a healthcare
potentially expand the market more broadly, invests in legal cannabis industry upon rig- fund, which merged with Perella Weinberg Partners.
but in practical sense, hundreds of formu- orous due diligence. Prior to that, Dr. Chung was a Healthcare Portfolio
Manager and Analyst at RBR Capital, Kingdon
lations linked to different symptoms may Other area of interest is cannabis diag- Capital, and Pequot Capital.
not be adopted if the physicians prescrib- nostics. As more cannabis drugs move into
Contact Lauren:
ing them are not aware or convinced. This the clinic, and states legalize cannabis use,
lchung@wpcapital.com
problem is already faced in the recreational cannabis safety and testing will become (929) 387-3605
business; Stores with too many choices are increasingly important, and players in this
WestPark Capital, Inc. is a full service investment
confusing for consumers. area include privately held Steep Hill, SC banking and securities brokerage firm which serves
One risk of Canadian companies is that labs, and a start-up CeresLabs, and publicly the needs of both private and public companies
worldwide, as well as individual and institutional
their business model is the same. Companies traded Digipath (DIGP), CannLabs (CANL),
investors. We are committed to forging lasting part-
that are focusing on physician education and Pazoo (PZOO). In addition, life sci- nerships with emerging growth companies and the
may have more staying power and defensible ences tools companies such as Shimadzu investors who back them. Our simple approach is to
provide customized financial solutions for virtually
brand. In addition, companies that have (TYO) and Sciex could represent a good any need. A complete range of investment banking
expansion overseas may have better com- opportunity in equipment sales. Lab testing and brokerage services are available to our valued
corporate and individual clients.
petitive advantage, ie companies with finish guidelines and protocols are evolving, and as
fill facilities overseas may have endorsement more regulations come onboard, diagnostics
www.wpcapital.com
of the govt of the country they are in espe- will be mandated and more testing would be
cially if they are also providing employment required.
in those countries. Where does this leave for hemp based

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 Robert Kraft: How would you define value over the long term, which is a minimum
Bakshi has been the most down- investing? What does it mean to you? five year, but usually 10 years or even higher
loaded and listened to Planet Professor Sanjay Bakshi: Well, its meant will be more than satisfactory. Now I think,
MicroCap Podcast episode. I think this is different things to me at different points of over the years, I also started appreciating the
due to his huge popularity within the value time. And I think it means different things distinction between the value investing and
investing community, as well as the wisdom to different people, and thats okay by the value traps.
he conveys within this interview, which are way for me. I mean, to me, it has meant dif- Value investing is more than buying some-
pearls that Ill carry with me for the rest of ferent things over time. EarlierI started my thing cheap. I mean, the universal stocks that
my investing career. The interview is approx- career as a Graham and Dodd investor - I are cheap is much larger than the universal
imately 108 minutes long, and I thought I was telling you that I read that essay on spe- stocks that are cheap, but will not be cheap
would share some of my favorite answers cial situations and I came back to India and over the long term. Not everything that
Professor Bakshi provided. started my career building a track record cheap will become fairly valued and a lot of
Here is an excerpt from our interview, in special situations and then I gradually value investors, some of my students many
where we discuss how Professor Bakshi transitioned into becoming a classic Graham of my students are actually unable to make
defines Value Investing and what it means and Dodd investor when I was buying stocks that distinction because they read Graham
to him: below liquidation value, below cash value, and Dodd and think that if it is selling below
below net networking capital something cash, maybe I should buy it. But maybe
that we all know, its called Net-Nets. its selling below cash for a reason and its
And of course buying businesses at low probably a good reason. I mean, maybe the
P/E multiples or high earnings yield as management is crooked and they dont want
Graham used to call them, and of course that to share the proceeds of the business with
kind of investing required wide diversifica- you and they control the company or the
tion and there wasnt much emphasis on the business is controlled by a family who thinks
quality of the business or the management. more about its own interest than about the
In fact, Graham used to say that I dont even minority stockholders, so thats like a value
need to know the name of the company; if I trap because there is no possibility of the
had the financial statements I will tell you if unlocking of value.
it is cheap or not. I mean the primary source So I think its important to distinguish
of marginal safety was coming from a low between what is cheap and what is likely
price point. So, initially the whole of value to remain cheap or rather think in terms
investing to me was that its something that is of probability that what will cause the gap
cheap, you are buying something that is fun- between value and price to narrow and
damentally cheap; that is ridiculously cheap sometimes the probability of that happening
and selling below liquidation value or below is remote and I think those are situations,
cash value or at a very low P/E multiple then which we will classify as value traps.
you should buy that business. I encourage you all to listen to the episode
But that definition changed over time - in full here:
now it means that I would like to buy into www.planetmicrocap.podbean.com n
a business whos value will grow over time,
n BY ROBERT BOBBY KRAFT
so that the expected return of holding it

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n BY STEVEN NELSON cared for every day. graduate of Brandeis University, he received Law
Review honors from NYU Law School.

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 where, especially in the worlds large urban
industry is born centers.
Governments worldwide have awoken to
It began with the exhaust from the the issue and are now attacking the problem
internal combustion engine. with tough emission standards and even by
Recognition of the air pollution cre- banning diesel-powered vehicles.
ated by the exhaust.
Public policy to curtail the air pol- The Solution
lution The play-out here for society at large is the
The evolving technology to develop development and evolution of the electric
Mired in air- the new-age electric motor and bat- vehicle, or EVand even more critically, the
tery to store the power to drive the progress in battery technology toward an
pollution - vehicle / EV. increased capacity battery pack thats stable,
Harnessing the minerals necessary to safe, and efficient.
the44-story CCTV create the new-age EV battery pack. And, it isnt just Tesla: VW, BMW, Daimler-
And going forward, the massive multi- Chrysler and Ford are building huge gigafacto-
Headquartersin billion dollar effort already underway ries that produce the next-generation batteries
to build the EV, replace the gas pow- and some of these are over 2X times more pow-
Beijing, China ered engine and develop the supply
chain of the raw materials necessary
erful than what Tesla currently has on the road.
with its innumerable ramifications. Copper, quite simply, is king

when it comes to realizing a post-
The opportunity to find the winners of gasoline world.
this play-out lives in the supply chain that The conventional internal-combustion-
will furnish and supply the raw materials of; engined car of today contains about 45
copper, lithium, cobalt, vanadium, nickel pounds of copper. The average pure battery-
and spherical graphite. powered EV requires about 175 pounds. The
expansion of EVs will require 120-million
The Problem in More Detail: tons of copper a year. Big picture, the mining
Whats now accepted is that air pollution industry is producing only about 16% of the
is the worlds largest single environmen- copper required to meet projected demand.
tal health risk. The pollution kills 3 mil- China is the worlds largest consumer of
lion a year, according to the World Health copper, with almost half of it going into power
Organization last year. generation and the rest into appliances, trans-
Air pollution in Chinese cities ranks port, construction and electronics.
among the worst on the planet and less than Bottom line: the mining industry of
1 % of Chinas top 500 cities meet the air today is not even close to finding or min-
quality standards set by the World Health ing enough copper to provide the metal for
n BY DR. JOHN L. FAESSEL
Organization. The problem is nearly every- the oncoming market demand.

Cordoba Minerals Corp. (CDBMF) on suppliers of cathode materials in the EV bat- facture may take decades to determine; think
OTC - (CDB) on the Vancouver exchange tery pack market. the oil / gasoline business vs the hundreds of
- Market-Cap $46 million. http://www.cor- Since 2010, China has spent well over $6 auto makers that have fallen by the wayside.
dobamineralscorp.com/ billion acquiring interests in cobalt mining * In 2016 Friedland was inducted into the
A mini-cap company I like in the cop- ventures and now control over 60% of the Canadian Mining Hall of Fame and this year
per space is Cordoba Minerals in Columbia. worlds refined cobalt production. was the recipient of The Northern Miners
Billionaire mining mogul Robert Friedland* Lifetime Achievement Award (link; https://
through his privately owned company HPX, Clean TeQ Holdings LTD insider.kitco.com/lifetime-achievement-
has just recently strengthened his posi- award-presentation-fireside-chat-robert-
tion in Cordoba to 69%. The interest from (CTEQF) on the OTC and (CLQ) on AX friedland/ ). Currently Friedland (Ivanhoe
Friedland / HPX stems from a bonanza grade [Australia] http://www.cleanteq.com/com- Mines) sits on three of the largest mineral
copper 10.25% copper / gold 4,440 g/t gold pany/ finds ever: perhaps the largest and richest
intersection. [Hole ACD036] The find has Conspicuously, Chinas Pengxin copper, perhaps the largest and richest zinc
a strike length of 1.3 kilometers, to widths International Mining Co. Ltd. recently find, and perhaps the largest and richest
of up to 400 meters and extends from the acquired 16.2% of Clean TeQ for $81 million. platinum find. Plus he has size interests in
surface to 260 meters below surface. Here again Robert Friedland* is a Director several other mining ventures, notably Clean
and the major shareholder of Clean TeQ and TeQ and Cordoba.
Cobalt recently acquired an additional 1.99 million I bought shares of Clean TeQ and Cordoba
shares on top of his previous 16.2% interest in the open market.
In reality the lithium ion battery is a cobalt, in three recently reported insider-buys in the
nickel battery in all but name. open market (May / June 2017.) www.onthemar.wordpress.com n
The dominant and necessary chemistries The cobalt / nickel deposit in New South
Dr. John L. Faessel is a seasoned and respected
for the next-generation EV battery are lithi- Wales, Australia, contains one of the highest
Wall Street professional with industry-wide recogni-
um, cobalt and nickel. Weve all heard about grade and largest cobalt and nickel depos- tion for expertise in market strategy and analysis.
lithium and true, its necessary. However, the its outside of Africa (and the worlds larg- He is widely recognized for his insights in pub-
lic companies. For over 25-years Dr. Faessels ON
far, far more essential elements are cobalt est and highest grade scandium resource.) THE MARKET reports have been widely distributed
and nickel salts. These salts make up around Over 1,300 core holes have been drilled in throughout the world to an extensive list of financial
institutions, brokers, mutual funds, hedge funds and
15% of the batterylithium only 5%. the near-surface deposit to delineate the
high net worth investors. Contact: onthemar@san.
When combined with Clean TeQs pro- resources size and grade. And its amendable rr.com
prietary ion exchange extraction and puri- to simple strip mining by excavators.
fication processing technology Clean TeQ Who will be the eventual winners of the
becomes one of the largest and lowest cost most popular and most profitable EV manu-

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

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
Figure 3: Barren and Ni/Co-loaded resins alloying element that exists for aluminum,
improving strength, corrosion-resistance
company. The management team is led by approximately 50 per cent of global cobalt and weldability. However, due to its scarcity,
Mr Sam Riggall, an experienced executive supply, with demand expected to soar as the scandium has rarely been adopted for large-
who has held senior management roles at world switches from internal combustion scale industrial applications.
Rio Tinto and Ivanhoe Mines. engines to electric drivetrains. Two-thirds of Global scandium oxide production is lim-
A Definitive Feasibility Study (DFS) is mined global cobalt supply comes from the ited to only 10-15 tonnes per annum. The
currently underway, due for completion in Democratic Republic of Congo. absence of reliable and secure long-term
Q4, 2017. Clean TeQ completed a pre-fea- Importantly, the battery industry cannot production, combined with a high and vola-
sibility study (PFS) in October 2016 which use cobalt or nickel metal to manufacture tile price, has constrained the use of scan-
assessed the economics of a 39-year min- battery cathode. The products must be dium to niche applications. The Syerston
ing operation, processing 2.5Mtpa of ore. supplied in the form of metal salts, usu- Project has the potential to produce up to
With 18,000tpa of nickel and 3,200tpa of ally hydrated metal sulphates (CoSO4.7H2O 170tpa scandium oxide as by-product from
cobalt production, combined with a C1 cash and NiSO4.6H2O). The key to Clean TeQs cobalt and nickel production, for very low
cost of US$0.89/lb Ni after cobalt credits, Clean-iX process is that it produces these incremental capital and operating cost. This
the Project demonstrates strong economics, metal salts in the primary extraction phase represents strong potential for significant
with a post-tax NPV8 of US$891M and an of processing, thereby saving significant re- economic upside in the Project.
IRR of 25%. Capital cost was estimated at handling and reprocessing costs. It does this For more information about Clean TeQ
US$680M. (see ASX Release of 5 October by selectively loading nickel and cobalt on please visit the Companys website:
2016 for more details on the financial evalu- to apolymer ion exchange resin, and then
ation). The economic model in the PFS did stripping the metals in the form of a sulphate www.cleanteq.com. n
not attribute any value to scandium produc- (Figure 3).
tion. The demand for lithium-ion batteries is
As the global automotive industry stands anticipated to grow strongly over the next
on the edge of a technology and energy decade as production of electric vehicles
revolution, cobalt and nickel are critical raw increases and batteries become an important
materials in the production of cathodes for component in utility-scale energy storage
the lithium-ion battery market. These met- systems. Syerstons high cobalt grades,
als make up between 70% and 80% of the combined with Clean TeQs proprietary ion
cost of producing the battery cathode. The exchange technology to produce the spe-
global battery industry already consumes cific high purity cobalt and nickel sulphates

PROFILED COMPANY nAsdAQ cM: FnJn
Finjan holdings, inc.

cybersecurity for the Modern era
introduction of this Finjan was formed in 1996 in Israel
to innovate behavior-based threat detection
Finjan Holdings, Inc. (NASDAQ: FNJN) is focused on proactively detecting risks by
a cybersecurity technology company with identifying patterns and behaviors of mali-
a rich 20-year history. Back in the mid- cious content. The name Finjan is derived
1990s the company pioneered behavior- from the word used in the Middle East to
based threat detection as well as various describe a vessel or small cup that contains
other dynamic real-time web and network or protects the coffee - or java. Shlomo
security concepts that are very prevalent in believed the name was appropriate because
the cybersecurity market today. the idea for the company and the associated
The company was founded by serial entre- technology came from his realization that
preneur, Shlomo Touboul who entered a with the introduction of the Java program-
competition hosted by Sun Microsystems ming language, the existing security software
to help them create programs for Java, a would not be able to contain or protect
software technology to deliver content and against the possible threats to a computer
information over networks and the inter- using Java. Finjan relocated its headquarters
net. Instead of focusing on new programs, in San Jose in 1997 and provided software
Shlomo discovered that on the back-end web solutions and hardware to the enterprise
there were many holes which would require market and, importantly, patented its land-
a new type of security for protection. Out mark technology.
From L to R. Michael Noonan(CFO), Julie Mar-Spinola, (CIPO),Phil Hartstein, (CEO)

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-
In 2005, the online security industry Multiple Paths Towards tions for the consumer using its innovative
began moving towards real-time, behavior- Future Growth patented technology which it continues to
based, proactive threat detection, at times build upon.
in violation of Finjans patent rights. In the Over the last two years, security software The goal with the first product, The
same year, the Company completed its first and hardware segments of the cybersecu- FinjanMobile Secure Browser, was that it
license with Microsoft.As a result of its suc- rity industry are reaching a tipping point be simple to access and easy to use as it
cessful licensing program, Finjan sold-off its of maturity and the market is undergoing a protects your mobile device from malicious
hardware and software divisions and kept faster pace of consolidation than ever before. content from the Internet. More importantly,
its global patent portfolio which contains With this evolving and changing landscape unlike most mobile applications, the Secure
more than 50 issued and pending patents Finjan continues to evaluate new ideas and Browser is intended to bring transparency to
and is organically derived through the com- opportunities for expanding our current users who search for anything on the internet
panys internal research and development programs and potentially starting new ones. with the promise of not collecting user data
investments. The company remains active in The last two years have been instrumental your data. Since the initial launch back in
pursuing the licensing of it patents and has for the company as it returned to the mar- June of 2015, Finjan has listened to customer
generated over $250 million in licensing fees ket with emerging businesses to spread its feedback and released several updates and
to date. Finjan stands behind and encour- thought leadership through its Consulting new generations of the application.
ages innovation and as such, the company arm, CybeRiskTM and to bring its technology In June of 2017, Finjan launched
is flexible on how it works with prospec- back to market through its subsidiary Finjan VitalSecurity Gen 3.7 built off Finjans pat-
tive licensees to ensure together, parties can MobileTM. ented technology and highlighting the ability
arrive at a fair value license. These patents Finjans subsidiary, CybeRisk, was formed to block trackers associated with Advertising,
have been and remain the foundation for to help address the growing need for enter- Analytics, Content and Social. This new and
Finjans technology and protecting its inno- prise security worldwide. CybeRisk partners improved offering provides passcode access,
vation will always be a key strategic objective with its clients and helps to identify current menu bars, browsing history and detailed
for the company. risks and mitigate future issues and dif- virus information to educate users on poten-
ferentiates itself but connecting the server tially malicious sites. Customer interest con-

written registered public offering of its com-
mon stock in which the company achieved
Finjans subscription service is easy to use and gross proceeds of $11.3 million. These events
priced affordably and can be used amongst many offer renewed confidence in Finjan, its his-
torical licensing and enforcement results,
devices. emerging business momentum and ulti-
mately its long-term staying power. In 2016,
Finjan returned to profitability for the first
tinues to grow with more than 165,000 internet. Finjan expects to launch/launched time as a public company. The companys
downloads to date. this in September of this year with revenue momentum has carried into the first half
While all of the mobile development generation for the VPN enabled browser of 2017 as with a record first quarter, the
has been internally focused to-date, the shortly thereafter. Over time, Finjans goal is company is on track to achieve profitability
Company does not lose sight of the fact to offer a premium suite of mobile security again for the full year. Finjan has officially
that to grow more rapidly it must consider products to the consumer and ultimately achieved its inflection point after several
go-to-market partnerships and acquisition move into enterprises. years of building and executing on our stra-
candidates. Finjans 20-year history in cybersecurity, tegic objectives which include vigorously
As such, in April of 2017, Finjan signed has enabled the company to gain a unique protecting Finjans IP and successfully rein-
a go-to-market partnership with Avira, perspective on the industry and almost troducing its technology and new products
a German multinational security soft- watch in slow motion as the market has into the market. The diversified platform
ware company that provides antivirus soft- consolidated and transitioned and Finjans the company has built should position it for
ware, Internet Security, Privacy, Identity and choice to move its enterprise-grade tech- strong sustainable growth. Looking ahead
Performance tools for computers, smart- nology into the hands of the consumer Finjan remains confident in its vision and
phones, servers and networks, delivered as was very deliberate and to-date has proven sees multiple catalysts ahead that should
both software and cloud-based services. to be a desirable offering and as risks to position the it for future progress across all
Avira will provide Finjan with its Virtual mobile security grows, the attractiveness segments of its business. n
Private Network (VPN) Platform for dis- of Finjans top-of-the-line security offerings
tribution and sale by Finjan Mobile as part will become even more attractive. 2000 University Ave., Suite 600, East Palo
of Finjans VitalSecurity suite of product Alto, CA 94303
offerings. The companies also entered into recent FinAncinGs hAVe (650) 282-3228
a confidential cross-license under their bolstered strenGth www.finjan.com
respective patents. Finjans partnership with investors@finjan.com
Avira sets us up for VitalSecurity Gen4 in When Finjan went public in November of
which Finjan will design Aviras VPN into 2013, it self funded with its own money to
its next browser to offer enhanced mobile start operations. Given the company had
security and protection for its customers. not done any formal pubic raise, it has
Many may ask why is VPN suddenly gain- taken recent momentum as an opportunity
ing so much traction? Attackers could be to strengthen its balance sheet over the last
intercepting mobile phone data without con- year. In May of 2016, the company did
sumers knowledge, and advertisers and ISPs its first financing with Halcyon and Soryn
are absolutely engaged in similar activities. to raise $10 million in preferred shares.
With Gen 4 VitalSecurity, VPN users are Impressively, Finjan redeemed and retired
protected against multiple threats. Finjans these shares in less than one year and turned
subscription service is easy to use and priced around to do another financing with the
affordably and can be used amongst many same partners for another $15 million in
devices. While there are mobile browsers June of 2017. Halcyon and Soryn not only
and standalone VPN apps available in in the appreciate the complexities of Finjans busi-
Apple and Google Play Stores VitalSecurity ness, but were able to see through the risks
combines these features so the users can and recognize all that Finjan has achieved.
enable/disable VPN while browsing the Separately, Finjan engaged in an under-
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
A JUNIOR GOLD PRODUCER
Two new gold discoveries reported on Teranga is a multi-jurisdictional West African gold
exploration property in Burkina Faso company focused on production and development,
as well as the exploration of more than 5,000 km2 of land
Focused on building its second gold located on prospective gold belts. Since its initial public
mine the Banfora gold project offering in 2010, Teranga has produced more than
located in Burkina Faso 1.2 million ounces of gold from its operations in Senegal,
which has a reserve base of 2.7 million ounces of gold*.
Industry winner of PDAC Social and
Focused on diversification and growth, the Company
Environmental Responsibility Award
is advancing its Banfora development project and
conducting extensive exploration programs in three
countries: Burkina Faso, Senegal and Cte dIvoire.
INCREASING ANNUAL GOLD PRODUCTION
Teranga has a strong balance sheet with US$80 million
(gold ounces)
in cash* and the financial flexibility to grow its business.
Guidance Range * as at June 30, 2017
205,000 225,000
216,735
182,282
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.
P R O F I L E D C O M PA N Y tsx-V: esk, otc MArkets: eskyF
eskay Mining corp

E skay Mining Corp (TSX-V: ESK) is a TSX Venture Exchange
listed company, headquartered in Toronto, Ontario.
Eskay is an exploration company focused 160 million ounces of silver from 2.2 million
on the exploration and development of pre- tonnes of ore.
cious and base metals in British Columbia in Over the past few years two major deposits
a highly prolific, poly metallic area known have been discovered on Eskays boarders.
as the Eskay Rift Belt located in the Golden Pretium Resources Inc. (TSE:PVG) to the
Triangle, 70km northwest of Stewart, BC. north commercially began production this
The Company currently holds mineral ten- summer at its BruceJack Mine. Seabridge
ures in this area comprised of 177 claims Gold (TSE:SEA) to the direct west of Eskay,
(130,000 acres) with its KSM project is one of the largest
Eskay is targeting precious metal undeveloped gold projects in the world mea-
enriched massive sulphide deposits in its sured by reserves.
Eskay 130,000 acre exploration holdings current drill program of 6,000 9,000 C.E.O, Mac Balkam is an experienced
in North West British Columbia Current metres on its 4,400-hectare SIB property professional investor in the Canadian mining
drilling project in Red
in northwestern British Columbia. Joint industry for over 25 years. He has aggres-
venture partner, on the S.I.B. property, sively invested in Eskay for the past 10 years
SSR Mining Inc. (formerly Silver Standard and led a re-vitalization of the board and
Resources Inc.) (SSR Mining) has the direction of the company beginning in 2010.
option to earn up to a 60% undivided Board members are accomplished Canadian
interest in the property by spending an businessmen strong in capital deployment
aggregate of $11.7 million in exploration in major commercial developments. Eskays
expenditures over three years. development approach is to joint venture
The S.I.B. drilling program to date has with significant mining companies with
successfully identified the target Eskay extensive geological experience that best
Creek assemblage stratigraphy beneath the compliments the specific objective of the
CCTF (Coulter Creek Trust Fault) for particular Eskay development program. The
over 1 km in strike length, and the explora- Board members hold more than 17% of the
tion work has demonstrated the presence outstanding shares of the company.
of alteration associated with footwall zones The Board anticipates as the S.I.B. drill pro-
to massive sulphide deposits. The comple- gram with SSR Mining matures and shows
tion of the program is hoped to provide the results that proves up the targeted mining
evidence of a new Eskay Creek Mine. The potential, suitors interested in buying out the
SIB property lies along trend, approximately company as a whole with its massive 130,000
4 km south-southwest, of Barrick Golds acres in the Golden Triangle will be in play.
former producing Eskay Creek Mine, which
was North Americas highest grade gold For more information:
producer between 1994 and 2008, produc- Info@Eskaymining.com
www.eskaymining.com n
ing over 3 million ounces of gold and nearly
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- to management and the Boards credibility
pounds in clinical trials will ultimately make would ensure user friendly financial state-
it to market. Most investors in this sector ments with meaningful disclosures. However,
will point towards two critical factors that its no secret that obtaining thoughtful and
enable success and a big payday. First, novel straight forward disclosures is not easy, espe-
science and a partially de-risked technol- cially when it comes to microcap and smaller
ogy (along with a follow-on pipeline) and reporting companies!
second, a management team with a proven As such, to evaluate cash burn, you may
track record of successfully bringing a com- have to go beyond merely understanding the
pound through development and to market. timing of the next inflection point and divid-
After these ultra-important factors and other ing cash on the balance sheet by the quarterly
macro considerations such as development or annual operating expenses or operating
challenges, regulatory hurdles and market loss. The following should be considered:
influences, what can the financial statements First, an explanatory paragraph in the
and related disclosures add to the mix in audit opinion may identify a going
order to identify potential red flags? concern situation, which essential-
The financial statements and disclosures ly means the auditor and company
are helpful in assessing and validating cash management dont believe there is
burn. After all, efficient capital utilization is enough cash on hand to last at least
almost always a critical factor for an earlier 12 months from the financial state-
stage BioPharma company. The science may ment release date. If this is the case,
be novel, the pipeline very alluring, but the and an inflection point is not immi-
cash on the balance sheet may not be suf- nent, then you may be looking at
ficient to get the compound or technology an expensive stock or debt offering
to its next inflection point. We like to think due to the desperate nature of the
SEC and FASB regulatory requirements, company, and significant ownership
n BY ROBERT E. FIORENTINO, CPA
along with the importance of transparency dilution on the horizon. Note: Lets

face it, in the world of life sciences, items excluded from the cash burn assess- Finally, if the disclosures and MD&A in a
the expected inflection points are not ment, a further assessment may be helpful public reporting company are boiler plate or
even close to guaranteed. Studies gen- to identify a liquidity red flag if you are repetitive, do not have tailored disclosures
erally take longer and burn more cash dealing with a public reporting company. All that focus on material information or dont
than originally estimated by manage- too often microcap companies are saddled seem transparent in nature, what does that
ment. With that premise, you will with derivatives from earlier stage financings tell you about the quality of management
want to look closely at the financial because of negotiated investor protection and the board? n
statement disclosures even if a going features and/or other accounting nuances.
Robert E. Fiorentino, partner at Friedman LLP, is
concern explanatory paragraph is not These often give rise to embedded deriva-
the Firms Life Sciences Practice leader. Rob has
part of the audit opinion. tives that are bifurcated from the financing over 30 years of experience in business advisory and
Review the stock-based compensa- and establish a derivative liability on the audit services, as well as private-industry finance
leadership. The private-industry experience includes
tion and equity disclosures to deter- balance sheet at fair value. These derivative senior finance positions within corporate, various
mine the current and expected non- liabilities are then required to be marked operating segments and internal audit at a large
Pharma company. Robs business advisory clients
cash compensation charge, as well as to market with the resulting increases and
have ranged from private companies, to smaller
non-recurring items disclosed else- decreases flowing through the statement reporting public companies, to well established mul-
where and other non-cash items such of operations. Depending on the assump- tinational public companies. He has an extensive
concentration in the Life Sciences sector with bio-
as mark to market adjustments on tions used, the profit and loss impact can technology, pharmaceutical, and medical device
past financing derivatives. This will be significant and material. Nevertheless, companies, as well as other industries including con-
sumer products, advanced manufacturing and vari-
adjust the operating expenses in the the impact is dismissed because it is a non-
ous R&D driven industries. Rob specialized in SEC
profit and loss statement with the cash charge which wont impact cash flow or reporting requirements, financing transactions rang-
goal of providing a proxy for cash capital needs. ing from traditional IPOs to Reverse Mergers/APOs,
and M&A transactions. Rob previously worked with
burn. This is typically not a problem, unless the a former Big 6 Firm as well.
Review the commitment footnote for non-cash negative profit and loss impact
For more information on Rob and Friedman LLP,
potential significant expenditures or associated with these mark to market adjust-
visit
increases which may not be included ments deceases stockholders equity so much www.friedmanllp.com
in the current operating statement. that you have a listing deficiency with one of or contact Rob at973-929-3652or
rfiorentino@friedmanllp.com.
If the company is a public reporting the major exchanges. To the extent the defi-
company, the MD&A liquidity and ciency cant be remedied, having to move to
capital section and other disclosures a lesser exchange may impact the liquidity
in the business section and risk factor and following of the stock!
section of the SEC filing may provide Depending on your concerns and the spe-
pertinent forward-looking informa- cific facts and circumstances, the financial
tion. statements and related disclosures can be
To the extent the company has rev- meaningful to the decision-making process.
enue from out licensing deals or R&D They often shed light on how creative man-
collaborations, remember that the agement has been in raising capital through
cash associated with the revenue may non-dilutive means such as state and federal
already be included on the balance grants, licensing, R&D and NOL attribute
sheet because in deals such as these, sales. For more established microcap public
the cash is often received before the companies, if the companys disclosure and
revenue is recognized. This may internal control assessments in the Form
need to be factored into the equation 10Q or 10K are not identified as effective,
if you used operating loss as a starting and the company is far enough along in its
point to develop cash burn estimates. capital raise and seasoning continuum, is
After an intensive review, if it is still dif- it reasonable that adequate resources were
ficult to gain an appreciation for cash burn not previously devoted to internal controls
and the respective run rate, you likely have when the level of R&D spend and outsourc-
a potential red flag. ing is so significant and capital utilization is
With respect to those same non-cash paramount?

PROFILED COMPANY A Private 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
AGTs Protocol
broad range of large and orphan indica- autologous cell therapy using ex vivo modi- techniques that have be used in several previ-
tions including infectious diseases, immuno- fication of T cells. HIV patients enrolling ous CAR-T human trials.
oncology, and monogenic disorders. AGT in the AGT functional cure clinical trials Participants are expected to gain natural
has enhanced the Lentiviral vector in a man- may first receive a vaccine (the trial will be immune control of the HIV virus that may
ner that mitigates the insidious mechanisms conducted both ways to see the difference remain in their body, and to be protected
HIV uses to infect T cells and compromise a with and without this step) to increase the against reinfection.
persons immune system. number of T cells that are most active against Although HIV disease in the U.S. and
This could mean that an HIV-infected HIV. Next, a draw of approximately liter many other nations seems to be under con-
individual could be made immune to HIV! of blood from the patient will be filtered trol because of highly effective (antiretrovi-
This may not only functionally cure HIV for T cells. The extracted T cells are then ral) therapy, this disease continues to spread
(an industry-term meaning equivalent to treated ex-vivo with the therapeutic lentivi- around the world. Only a small percentage of
a cure, but not immediately, fully eliminat- rus AGT103 to protect the T cells from HIV HIV+ people in the U.S. (20%) are effectively
ing all traces of the virus in the patient), it to restore their ability to clear HIV virus treated and the remaining 80% are contagious.
may also make the individual permanently without being vulnerable to HIV infection. Antiretroviral therapy or highly active antiret-
immune to reinfection. That would be Finally, the patients T cells are infused back roviral therapy (HAART) involves powerful
important news for the over 1 million HIV- into the patient to carry out normal immune drugs with negative side effects. Even when
infected individuals in the U.S., as well as the function against HIV virus -- thus creating these drugs are effective, the patients have
estimated 37 million HIV-infected persons an anti-HIV immune response and func- shorter life spans and much higher risk for
worldwide. tional cure of the patients HIV. cancer, diabetes, liver or kidney failure and
AGTs therapeutic strategy uses gene In some ways, AGTs treatment protocol a host of other life-threatening conditions.
modulation both to reduce the levels of is similar to the Novartis treatment for pedi- This reality for the HIV community makes a
CCR5 and shut down the expression of atric and young adult acute lymphoblastic functional cure an imperative, and highlights
gene that were integrated by HIV that are leukemia (a treatment from Novartis that the magnitude of the market.
necessary for HIV viral production. The has been in clinical testing for several years, The near-term addressable market for an
delivery method of AGTs treatment is an was recently unanimously recommended for HIV functional cure in the U.S. and Europe
approval by an FDA advisory committee and ranges from $40 billion to $80 billion. AGT
is likely to receive marketing approval in the has attracted a dream team of world-
U.S. this September). AGT does a slightly renown experts in HIV who are collaborat-
different transformation (reprogramming) ing to optimize and prove their therapeutic
of the patients T cells, but the type of virus in the clinic.
used is the same, and a substantial portion
of the protocol is very similar. AGT hopes For more information:
to improve safety for trial participants by www.americangene.com
Jeffrey A. Galvin
Co-Founder, CEO paralleling some established ex-vivo clinical info@americangene.com 800-888-9480 n

OPINION
Junior Resource Market: 2017 Mid-Year Review Rick Rule
I
recently interviewed Rick Rule at the own records almost every single day. But volumes pick up, and usually volume pre-
Sprott Natural Resource Symposium Im seeing that gold is creeping up also, cedes price. Am I correct?
2017 in Vancouver. Rick is President of which is very unusual. Silver has seeming- Rick Rule: Three answers as to why. First,
Sprott U.S. Holdings, a publicly traded com- ly crept up even more on a percentage scale the junior market was oversold, and some of
pany Stock Ticker: SII on the Toronto Stock and the dollar is strong but showing signs the response that weve seen is seller exhaus-
Exchange. Rick, welcome back to SNN Live. of wekaness. When was the last time this tion. The second thing is that it takes a long
occurred, seems like an anomaly to me. time to profitably deploy capital. The last
Rick Rule: Shelly, on behalf Sprott Shareholders, Rick Rule: Im not smart enough to investment cycle that we had in this universe
its a pleasure to have you here in the conference. understand all of those correlations. The was the middle part of the last decade. The
correlation thats made sense to me over capital that was employed in 2004, 2005, 2006,
Shelly Kraft: Thank you for having us. time has been that the Delta between the U.S. 2009, 2010, is now beginning to bear fruit.
Rick, I want to start with giving you the ten-year Treasury and the ten-year treasury In my experience of over 40 years, it takes a
opportunity as we do at every annual strip, which is the markets implication of the decade, ten years for district exploration to
Sprott conference for your State of the real yield in the U.S. ten-year treasury, deter- begin to yield discoveries. Ten years ago, we
Union of the resource market. mines the gold price; when the implication is began exploring in places like West Africa and
Rick Rule: This will be easy, you know that we have negative real interest rate, then in the deep parts of Eastern Australia. The
Shelly and I dont need to tell you. The gold does extremely well. Whats interesting consequence of ten years of focused explora-
junior resource business has been through about the last 18 months as you point out is tion is were now starting to enjoy the results
a tremendous bear market. The Toronto that gold did well the same time that the U.S. and the consequence of that which of course
Stock Exchange Venture Index was off 88% in dollar and the U.S. ten-year treasury did well. the news that drives share prices.
nominal terms, probably more like 92% in real In my experience that happened first in And thirdly, its important to remember
terms. What investors need to recognize is 1975, secondly in 2001 and this is the third in terms of a market that was as old as these
that bear markets are the authors of bull mar- time in my 40-year career that Ive observed stocks were; that you can move up on fairly
kets because this is a capital intensive business. this phenomenon. Whats important for your low volumes because you exhaust the sellers.
The consequence of that is this tremendous audience to understand is that in the prior two The stocks have come to be in very, very strong
bear market will at some point in time give instances, the dollar eventually rolled over, hands. Hands that will not trade the stock for a
way to a real bull market. My belief is that which you point out it may be doing now, and 10% or 15% gain, hands that will be looking for
the bear market really ended the end of 2015. the consequence of that was that the gold price 50% and 100% increases. Im not suggesting
Specifically, I think with regards to precious soared in the aftermath of that circumstance. Is that those increases are imminent. What Im
metals and precious metal stocks, that were in past prologue? I dont know, Im not an econo- suggesting is that the better companies in the
the third inning of a nine-inning ballgame. In mist. Im a credit analyst. What I do know is sector are extraordinarily well owned, relative
other words, were a third of the way through. Ive seen this circumstance twice before and the to other larger, more popular sectors.
The recovery that we had in 2016 was pleas- outcome from the point of view of gold hold-
ant and dramatic. The markets faded since ers, not U.S. bondholders, was very pleasant. Shelly Kraft: Now, Im going to hit you
then. But its important to remember that were with something about base metals. Lets
in a stretch. It isnt like the game is over. With Shelly Kraft: On topic, I see that some of the call it, Green Energy. For instance, as you
regards to the rest of the resource sector, were juniors stock prices are starting to bump up know, there is less lithium used in a lithium
in the first inning of a nine-inning game. It a little bit. Now, I dont know if its because battery than copper or cobalt or nickel.
doesnt mean that recovery happens in a period U.S. investors are starting to be attracted to How is this for example affecting base met-
of time thats comfortable for your audience, gold and theyre looking for opportunities als in your opinion?
but it is inevitable even if its not imminent. or because some of the other sectors are so Rick Rule: I think most of the impact is in
Shelly Kraft: Weve been around a while overpriced and toppy. Bottom feeders if the future, with the exception of course of the
in the markets and I see that the Dow Jones theyve been buying gold outright thats one cobalt price, which has done very well. And
Industrial Index is going up and breaking thing, but now all of a sudden were seeing you point out something very interesting.

The lithium battery, by value is 4% lithium. Rick Rule: Im saying that you have been companies to joint-venture their projects.
In other words, it is a copper, nickel, cobalt through five very, very bad years. You suf- In other words, if there are 40 prospect gen-
battery. Interesting also that the worlds four fered through the pain, be prepared to enjoy erators in the investment landscape, ten will
major lithium producers, pardon me, esti- the gain. Bull markets follow bear markets, be worth investing in, not 40.
mate that collectively they have a hundred bear markets are the authors of bull markets.
years reserves at current lithium demand. And the bear market that weve just been Shelly Kraft: Here we are in third quarter
We dont have a shortage of lithium. We have through I believe is the author of a pretty 2017. How do you see the year ending and
a shortage of lithium processing capacity, and incredible bull market coming. what do you think 2018 is going to look like?
at these prices that will be addressed in a two Rick Rule: The rest of 2017 will be choppy at
or three year plus timeframe. Shelly Kraft: In your opinion, is there more best. I see in the very near term continued con-
Many companies that purport to be looking cash on the sidelines ready to come in at this traction in the natural resource markets by
for lithium, in other words, that dont have any point or are investors spent, in your opinion? the way youre asking me a question well above
lithium believe there is a lithium shortage, and Rick Rule: Not spent at all. Theres tre- my pay grade. Since you asked Ill answer. Im
those companies which do have it believe that mendous, tremendous dry powder just in quite optimistic about 2018, at least in our own
theres a surplus. You need to decide yourself our network. But importantly, you know, portfolios, because weve tended to confine
which side is more credible, those that have it Sprott, and youre aware of this Sprott went ourselves not to the market in general but to
or those that dont. Moving on to the rest of out last year to raise an institutional lending companies in particular that we see utilizing the
the battery metals, this is exciting, particularly fund. The first institutional fund that we cash weve provided them and using the capital
cobalt from my point of view. The problem ever raised, the first 12 months were fruitless weve provided them in very, very constructive
with cobalt is that you dont find cobalt in knocking on doors for no return but ulti- ways. One of the things that many people get
countries that youre comfortable with. You mately in terms of -- including sidecars, we wrong in the resource business is they dont
find cobalt in the Congo and Russia. What raised over $800 million. Theres a tremen- correlate their time expectation with the time
investors want is politically secure cobalt. The dous amount of money circling the natural required to add value.
problem with that is that politically secure resources space, more than adequate amounts In my experience, you make money in junior
cobalt is a fantasy. You want a great country of money. Its a function of having the correct resources by answering unanswered questions,
and you want cobalt. Okay, you want to date opportunity, the correct management team, and in my experience the time required to
the four prettiest girls from Victorias Secret. meeting the correct investors. Theres a lot of answer an unanswered question is 18 months.
What you want doesnt matter. Its what you money out there, theres a lot of opportunity For an investor that has trauma holding stock
can have. We are attracted to the cobalt space, out there. Markets are messy. It takes two or over a long weekend, the probability that they
attracted enough that were investing in the three years to get it right, but its coming. would be able to hold onto a stock for the time
Congo and were investing in Russia. necessary to realize the reward seldom occurs.
Shelly Kraft: So, Ive interviewed a lot of Whats happened to me and I think has hap-
Shelly Kraft: But, I understand that when project generators over the course of the last pened to you Shelly as a consequence of being on
youre hunting for copper you could end up year. It seems like theres another one born earth for a long time is that an 18-month time-
finding nickel, cobalt and other elements? every day. Whats your opinion on them for frame seems less daunting to us than it once did.
Rick Rule: Absolutely true. And one of the our investor audience if you would?
things that we hope to do is assist companies Rick Rule: Well, the prospect generators, Shelly Kraft: You know what, for more
exploring mafic and ultramafic horizons for the people who use their management acu- information, lets get your website out
whatever happens to be there, and that could men and other peoples money to explore there so our audience can come and visit.
occur for example in lateritic terrains in Brazil is arithmetically the most intelligent way Rick Rule: Delighted, www.sprottglobal.
and Australia, which would be very nice. to pursue the exploration business. Its com. Your audience should subscribe to
Believe me, Im not a slave to the Congo. Its important to know that not all prospect Sprotts thoughts, its a great publication and
just that when I look for cobalt and I look for generators are the same. Many are what I its absolutely free. n
copper, I look for places where its available in would call, and pardon the pun, constipated
Here is the link for order-
grade, and thats often in challenging countries. generators, meaning that projects come in
ing Sprott Conference MP3s:
but they never get them out. Investors need https://opptravel.webdestin.net/
Shelly Kraft: So, here we are at the Sprott to pay attention to which explorers are really EventTariff/Index/naturalresour-
ceregistration-SNN082
2017 Conference. What are you saying to successful and whose success is evidenced
the investor audiences when speaking? through their ability to attract major mining

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
nies meeting these requirements.
When it was promulgated in June, 2015,
Regulation A+ was heralded as the panacea
fully understand that its far easier to grow the
company and raise capital with an actively-
traded stock. Going public does not create real
can become publicly-traded. Briefly, they are: for smaller companies that want to raise capital (liquid) wealth overnight.
(a) the traditional IPO; (b) the so-called Slow in a public offering directly to the public, via Raising capital, like almost everything in busi-
PO; (c) the relatively new Regulation A+; and social media and other ways to reach investors, ness, is a competitive undertaking. Newly-public
(d) of course, the reverse merger. both traditional and nontraditional. However, companies must compete with the likes of Apple,
In those articles, I have stated my preference despite all of the hype surrounding it, very few Amazon, the big banks, etc. when trying to raise
for using the reverse merger technique: it is by Reg A+ offerings, other than local banks and capital, because retail and institutional investors
far the quickest, the most sure, and--although it real estate deals, have successfully raised more are not throwing their money at a company just
doesnt raise capital in and of itselfit can be far than minimal amounts of capital. because its public instead of private.
less expensive than a proposed IPO or a Reg A+ The main reason I see for the lack of suc- In order to build a post-reverse merger
offering if they are unsuccessful. So, to summa- cess of most Reg A+ offerings is that social market, newly-public companies need to have
rize my thoughts about these techniques: media-type investors mostly want to invest in a compelling story, to show Wall Street the
These days, IPOs are almost exclusively consumer oriented products, but have only significant upside long-term growth prospects
accomplished by companies that are far larger limited capital available, thus requiring issuers of their company.
than the usual type of company that completes to spend enormous amounts of upfront money The major upside of a reverse merger is not
a reverse merger, thus significantly limiting the to create the marketing program for the offer- simply being publicits what the company
number of companies that can even contem- ing and to build a customer/investor base. does once its there.
plate an IPO. Another important drawback for Which brings me to reverse mergers. In So, the consensus opinion of the experts
companies that want to go public via an IPO is the past 12 months, I have seen an increasing is that reverse mergers, which have been
that potential offerings are subject to market demand for clean public shell companies, as around since the enactment of the Securities
conditionsif the stock market is declining, vehicles for the reverse merger (Im using the Act of 1933, will continue to be a strong, via-
the underwriter can either delay or even cancel term shell to describe companies that check ble alternative to the other ways to go public.
the offering. both the shell box and non shell box in their And, I strongly agree with that consensus.
The Slow PO is a term used to describe a SEC filings). My sources tell me that they believe Many thanks to David Lazar of Zenith
method by which private companies become the demand will continue, as the public markets Partners International, for his insights. n
publicly-traded: a private company can raise keep hitting new highs (because of Donald
John Lowy is the founder (in 1990) and senior partner
money from investors over the years, build its Trump??). As a result of the continuing demand,
of his law firm www.johnlowylaw.com, and the founder
shareholder base, and then make those shares the number of available shells has significantly (in 1993) and CEO of Olympic Capital Group, Inc.
publicly tradable. The Slow PO requires a decreased, causing an increase in the cost to (www.ocgfinance.com), both based in New York City.
John is a highly-respected and acknowledged expert in
broker-dealer to file a Rule 15c2-11 application purchase and reverse merge with a public shell. reverse mergers, capital formation, financial consulting
with FINRA to clear the shares for trading. To be clear, not every company is suited to and initial public listings of all types.
As an attorney, a consultant or principal, John has
That application can take several weeks to be go public, whether by reverse merger or other-
led or participated in more than 200 such transactions,
cleared, and does not result in the company wise. In the opinion of experts I have spoken creating market value in excess of $5 billion. He has
raising any capital. So, the Slow PO can be with, the companies best suited to go public are been instrumental in leading the process by which
many of these companies have reverse merged, raised
used only by the relatively few private compa- either the ones that are in the most innovative capital, and achieved listings on the NASDAQ or the
industries (True Disrupters), or those with a AMEX, or were sold to larger companies.
In addition to the U.S., John has completed transac-
history of revenues and earnings. Both types
tions for clients based in at least 15 foreign countries.
of companies have the best long-term potential The sectors in which his clients are engaged range
for up-listing to the NASDAQ or NYSE. from low tech to high tech, real estate, pharmaceuticals,
medical devices, biotech, oil and gas, mining, renew-
Once a company goes publicagain, no able energy, entertainment, food, agriculture, education
matter how they get therethe most chal- and retail, among others.
He received his B.A. from Tufts University and grad-
lenging problem is establishing liquidity in
uated from the University of Pennsylvania Law School.
the trading market. In my experience, many He is a frequent contributor to MicroCap Review.
n BY JOHN LOWY, ESQ. CEOs of newly-public companies often dont www.ocgfinance.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
Brady Fletcher
Lets start with an overview of TSX Venture provide additional flexibility to Venture stage
Exchange (TSXV). issuers, allowing them to finance more easily, Good Visibility A large analyst commu-
TSX Venture Exchange (TSXV) is an impor- use shares for acquisitions, scale or pivot their nity covers small-cap companies listed on TSXV.
tant driver of the Canadian economy, and a key business as necessary. This means that even early-stage companies can
element in Canadas innovation and venture cap- get capital markets profile and attention from
ital ecosystem. TSXV is the junior exchange to What types of companies list on the Venture investors locally and internationally
Toronto Stock Exchange (TSX) and is part of Exchange? Stay local, but raise money globally - US
the worlds most successful two-tiered exchange Historically, the resource sector has pro- companies that want to go public on TSXV
system. TSXV is a leading platform for venture vided a foundation for both TSX and TSXV, do not need to re-incorporate in Canada or
stage capital formation, allowing companies to but today, TSXV is a well-diversified exchange move their head office to Canada. Simply put,
leverage a public listing to raise public venture with companies from the technology/innova- US companies can stay put, while accessing
capital, use their share currency for acquisition, financial services, industrials, telecom/ capital from abroad
tions and employee incentives, and scale their media, and natural resource sectors. A com- Tailored & Flexible Listing Criteria
business in the public arena. As businesses mon theme for all of these companies is that Listing requirements are tailored to compa-
grow and mature as publicly-traded companies, they are looking to access capital (sometimes as nies at varying stages of growth. As a result,
they can graduate to the main board, TSX. In little as a few million dollars, or sometimes over the cost of being a public company on TSXV
fact, in the past 16 years, there have been over $100 million) to fund growth and acquisitions. is not prohibitive for early-stage businesses.
635 companies that have successfully graduated Growth Support TSXV-listed com-
from TSXV to TSX. What are the benefits to US companies list- panies have the potential to graduate to the
ing on the TSXV? senior board, TSX, as they grow and mature
What does the V in TSXV stand for? Explain Companies from around the world look to Entrepreneur Friendly - entrepreneurs are
Venture - we are often referred to as simply TSX and TSXV every year to access growth able to build their boards with industry lead-
the Venture Exchange and companies that capital and get liquidity. In particular, US com- ers, rotate shareholders as necessary through
raise capital on TSXV often describe this panies look North for the following reasons: the exchange, communicate and scale accord-
as raising public venture capital. TSXVs Access to Capital, early U.S. issuers ing to their business plan, etc.
unique eco-system has been built on facilitat- raised $2.7 billion in equity capital on TSX/
ing venture stage capital formation and pro- TSXV in 2016. Importantly, US companies How can the TSXV help companies with
viding a platform for venture stage companies are able to go public in Canada sooner than capital formation and funding?
to list and build on that foundation. they typically can in the US We believe that the public markets offer a
Efficient access to capital - rather than a unique value proposition and in some cases
How do the listing requirements differ from prolonged VC due diligence process, listed a better cost of capital for acquisitions while
the Toronto Stock Exchange? issuers can raise money in weeks, or shorter providing investors with some liquidity and
The listing requirements on TSXV are through the bought deal mechanism because the company with on-going access to capital.
designed for early-stage companies. TSXV of continuous disclosure requirements ensur- We also believe that the process of capital
companies are fully-regulated and all coming prospective investors are up to speed raising can be complicated (and sometime
panies must meet initial and ongoing rules Differentiated deal structures: by raising overwhelming) for entrepreneurs. So, we
set by TSXV and the Canadian securities capital from a broad group of public investors have dedicated teams in Canada, the US,
regulators. BUT, these rules reflect the nature (instead of a handful of VCs), entrepreneurs Europe, the Middle East, and Asia that to
(and stage) of early-stage companies. As a find that they can often realize more favorable work with companies and help guide them
result, the costs of being a public company deal structures (eg: only common shares are through the process of going public. n
on TSXV are not prohibitive, even for early- issued, no liquidity preferences, etc.). In many
How to learn more:
stage businesses. Thats why there are over cases, these terms can help entrepreneurs
More information on TSXV can be found at
1,500 companies listed on TSXV today. Once retain greater influence over the companys www.tsx.com/listings or on Twitter @TSX_TSXV
listed, the Venture rule set is also designed to long-term growth strategy Brady Fletcher, Managing Director

COMMODITIES CORNER
VSTOXX / VIX Volatility
Spread Behavior During

Recent Volatility Events
(The full paper is found at the Eurex Exchange) oversold or sitting at or near the bottom For example if the spread is priced above 11,
T
of the range. A trader may sell VSTOXX it would be considered very wide with an
he Brexit election and the U.S. elec- Futures and buy VIX futures when the increased probability for either VSTOXX
tion are now behind us. Several spread is near the high end of the range or Futures or VIX futures to move to narrow
European elections are on the hori- considered overbought and finding resis- the spread and what that may imply about
zon in 2017. And there doesnt seem to be a tance. the underlying equity market?
shortage of ideas being discussed for poten- Often, when the VSTOXX / VIX spread Table 2 lists the average, median, maxi-
tial future macro volatility events. This arti- widens, it is due to one of the below items mum and minimum VSTOXX / VIX spread
cle examines the behavior of the VSTOXX occurring: price and the frequency of how often the
/ VIX spread during recent volatility events. EURO STOXX 50 Index declines, caus- spread price is either above or below a spe-
Could the understanding of the spreads ing VSTOXX Volatility index to rally while cific spread price. For example, 0.8 percent
behavior during past volatility events offer the VIX may remain relatively stable thus of the time the spot spread price is above
some insight for future events? causing a widening spread price. 14. The pricing and the frequency of spot
Trading a spread is just another way of S&P 500 index rallies causing the VIX versus futures VSTOXX / VIX spreads are
saying trading relative value. An investor index to decline while VSTOXX remains similar. VSTOXX Futures began trading 2
is simply going long one product and short relatively stable equating to a widening June 2009, which is the starting date of this
another product as they are seeking the spread. analysis to compare the spread statistics of
spread price or price differential between S&P 500 index declines and the EURO the spot price to the futures price.
the two products to either widen or narrow STOXX 50 Index declines causing both Monday 24 August 2015 the Dow Jones
based on the position they are holding. the VSTOXX and VIX indexes to rally. Industrial Average opened 1,000 points
In the case of the VSTOXX / VIX spread However, VSTOXX will often rally at an lower. The declining U.S. equity markets
a trader may go long VSTOXX Futures and accelerated rate versus VIX thus widening triggered a decline in global equity mar-
short VIX futures when the spread price is the spread. kets and rallying of volatility indexes. The
The VSTOXX / VIX spread may be uti- VSTOXX Futures / VIX futures spread
lized as a sentiment indicator. If the spread came close to going negative at 0.925 on 25
is oversold or overbought it could give an August 2015. The price of the spot spread
indication of how the individual volatility actually did go negative at -2.3715. This
indexes may behave in the near future to narrowing of the spread may be attrib-
either narrow or widen the spread price. A uted to the VIX futures rallying faster than
second derivative analysis of the spread may VSTOXX Futures. As noted in Table 2 the
imply that if the volatility indexes should futures spread price is negative 0.7 percent
move, it could be a signal for direction of of the time. Only 11 percent of the time is
n BY MARK SHORE, MBA
the respective underlying equity markets. the futures spread priced below 2. The price

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

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 10th largest market two decades ago. China
per cent bolstered by the expanding flow of opening-up policies in an effort for main-
capital from China. Since Britains lease on land businesses to become more globally
the city ended, Hong Kongs stock market competitive transformed Hong Kong from a
capitalization is up eightfold growing from market dominated by British Colonial firms
HK$3.2 trillion (US$410 billion) as of the and local conglomerates to an international
end of 1997 to HK$28.0 trillion (US$3.6 hub with an increasingly important role as
trillion) as of mid-July with the city advanc- a gateway to China. Since 2014, a series of
ing to the worlds 7th largest market from events, including the launch of Shanghai-
n BY LESLIE RICHARDSON

Hong Kong Stock Connect and Shenzhen- Shenzhen overtook Hong Kong as they and finance acquisitions to expand its eco-
Hong Kong Stock Connect and the flow knocked the city to fourth place in terms of system. Founded in 2005 by Singaporean
of mainland insurance funds and mutual IPO funds raised. Hong Kong had 69 new entrepreneurs Min-Liang Tan and Robert
funds into Hong Kong, have brought more listings raising approximately HK$53.8 bil- Krakoff, Razers main business is manufac-
mainland capital to the Hong Kong market. lion for an increase of 77% from 39 IPOs and turing gaming peripherals such as mouse,
Mainland Chinese companies dominated up 23% from HK$43.6 billion raised during keyboards, and mouse pads, as well as lap-
Hong Kongs IPO market last year as Chinese the first half of 2016. With just three large tops specifically designed for playing video
IPOs raised HK$156.6 billion, representing IPOs, small and medium-sized deals domi- games and e-sports events, where audience
82 per cent of all listings. Southbound flows nate the first half of the year. watch professional video game players com-
from investors trading through Shanghai Education proves to be profitable with pete on big screens. Around 50% of its sales
and Shenzhen Connect continue to increase private schools and tutoring institutions come from the U.S. market, while around
with many Chinese mom-and-pop retail springing up around China as state schools 13% is from China. Recent investments
investors looking for bargains outside main- cannot meet the growing demand for quality and acquisitions include theiconic audio IP
land China. Mainland companies with dual education among Chinas middle class. Two THX, the mobile hardware firmNextBit, and
listings have an average discount of 25% in successful IPOs in Chinas private education the SE Asia-focused e-payment specialist
the SARS. Longer term, Hong Kongs equity sector are Wisdom Education International MOL, which is now the master distributor
market is expected to benefit from Chinas (6068:HK) which raised US$150 million and of Razers zGold virtual currency.
Belt and Road projects and the development China YuHua Education (6169:HK) which The other technology firm to announce its
of the Pearl River Delta economic zone. raised US$245 million. Wisdom Education IPO is Tencents online publishing service,
The Hong Kong Exchange (HKEX) con- International is up 71 per cent while YuHua China Literature. China Literature is con-
tinues to look for ways to enhance the Education is up 36 per cent as of July 17, sidered to be Chinas equivalent to Amazon
citys competitiveness as a global financial 2017 from their respective IPO dates. Kindles service and is expected to raise up
center by attracting high-growth, new econ- Wisdom Education International is con- to HK$800 million (US$102 million). The
omy companies, diversifying its markets and sidered the largest private school group in company has 175.3 million monthly users
developing Hong Kongs technology sector. South China and YuHua Education current- across all services and 8.4 million pieces of
Despite ranking as a top destination for ly operates one university and 24 schools in content from more than five million writ-
IPOs, the exchange still struggles to attract the K-12 education segment. Listing on the ers. Tencent (0700:HK), one of the largest
significant volume of technology deals. Last GEM board this February, Dadi Education internet and gaming company in the world
year the financial services sector accounted Holdings Ltd (8417:HKG), a consultancy and Asias highest value technology firm,
for 69 per cent of total fund raised while the firm that advises students on overseas stud- owns 65 per cent of the business. Tencent is
technology sector accounted for only 3 per ies, raised HK$148.8 million (US$19.0 mil- expected to retain at least 50 percent control
cent. As part of strengthening the scale and lion) and is up 324% since its IPO. Another as China Literature becomes a subsidiary. n
quality of Hong Kongs capital markets and noteworthy IPO on the GEM is In Technical
Ms. Leslie Richardson has over 20 years of invest-
continuing to develop Hong Kongs market Production Holdings (8446:HKG), a lead-
ment management and equity research experience.
as a competitive international hub, HKEX ing visual display solution provider for pop She operates a boutique investor relations firm in
is evaluating adding a third board to attract concerts, corporate events and exhibitions Hong Kong for Asian companies listed in the U.S.
and Hong Kong. She also assists private companies
more technology firms along with start-ups in Hong Kong which raised HK$60 mil- develop investment material and build an inves-
for new economy and technology compa- lion (US$7.7 million) in mid-June and is up tor following in preparation for a public listing.
Additionally, she is the Asian Correspondent for
nies. Currently, technology companies are 271 per cent as of July 17th since its IPO.
Micro-Cap Review, www.microcapreview.com, a
turned away from listing because they are During the first week of July, two technology financial magazine focused on mirco-cap compa-
unable to meet specific financial yardsticks companies announced their plans for an IPO nies. Previously, she worked for CCG Elite in assist-
ing Asian-based, U.S. listed clients formulate key
due to having no profit or low cash flow. this year. Razor, a California based gam- communication strategies. Ms. Richardson began
The proposed new board is expected to have ing company backed by Hong Kong tycoon her investment career at U.S. Trust Company then
went on to join Odyssey Advisors as a portfolio
two markets, one for large companies that Li Ka-Shing, is looking to raise more than
manager and Director of Research. Ms. Richardson
match all the main board requirements but HK$600 million (US$77 million). Razer specialized in high growth sectors such as bio-tech,
who cannot list in Hong Kong because they plans to use the IPO proceeds to develop new alternative energy, IT and telecommunications. She
earned her M.B.A. from the University of Southern
have dual-class stock structures and a second verticals in the gaming and entertainment California. Ms. Richardson is based in Hong Kong.
market dedicated to start-ups companies. industry such as smartphones, to expand www.elite-ir.com.
In the first half of 2017, Shanghai and its research and development capabilities,

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- remain so.

tion stocks for more than twenty years. In Literally hundreds of analysts and hun-
that time, we have had success with products dreds of thousands of investors study and
that have run the gamut from highly concen- have opinions about names such as Apple
trated portfolios, where we know the man- (AAPL), Exxon (XON) and Microsoft
agement team, the company and the indus- (MSFT) and, consequently, the prices for
try intimately, and where we use little to no these highly-followed stocks reflect market
screening to discover interesting investment sentiment very well and are fairly valued,
ideas to very diversified portfolios that pri- as seemingly no one has an informational
marily use quantitative screening to source advantage. Not so in micro cap land! Micro
ideas. However, in the case of the latter, cap stocks tend to be considerably underfol-
some fundamental analysis and judgment is lowed by sell-side analysts because there
required to eliminate unsuitable candidates. is less opportunity to generate trading and
Over the years, both of these approach- investment banking revenue. The average
es to small and micro cap investing have micro cap stock has fewer than three ana-
worked well for us. Today we explore why lysts covering it, with over 24% of micro
and how a primarily quantitative approach cap stocks having no analyst coverage at all.
to the micro cap universe can lead to out- And lets not forget that some of the cover-
performance at a lower risk level and with age of micro cap stocks is paid for by the
downside protection a tall task indeed! companies themselves and may be less than
Why would a quantitative approach work objective. The other factor coming into play
in micro caps when it is increasingly obvious here for micro caps is that larger institutional
that this approach (or almost any approach) (and arguably smarter) investors are widely
does not work well in the large cap arena any underinvested here due to structural limita-
longer? Quite simply, the large cap universe tions (e.g. lack of liquidity).
is very efficiently priced (and will remain Our investment approach seeks compa-
so) while the micro cap universe is not effi- nies with the following characteristics, the
n BY LEN HAUSSLER, CFA
ciently priced and, in all likelihood, will also combination of which has outperformed

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

companies even in a growing economy such quantitative process. Mr. Market is prone to about 20% lower than the benchmarks and
as the one we are in currently. wild swings of emotion, leading to over- and performance in down markets has been con-
The Bad We eliminate those companies under-valuations, especially in the underfol- sistently positive on a relative basis.
that are in the lowest quintile for year over lowed micro cap universe. Oftentimes, the Our process has been successful so far and
year earnings growth, the highest quintile negative news is more than reflected in the certainly provides evidence that the combina-
for leverage (adjusted for industry and sec- current stock price. By demanding a margin tion of machine (the quantitative portion of the
tor averages), the worst quintile for price of safety (lowest 40th percentile of trailing approach) with man (the fundamental review)
momentum and any company that has nega- P/E in our process) on every purchase and is an effective approach in the micro cap space.
tive free cash flow. adhering to strict sell rules, we minimize the However, one can never be complacent and the
The Ranking We then rank the remain- risk of permanent loss of capital. investing environment can and does change
ing stocks based on valuation, ROE and price The Sell Rules We meet frequently to dramatically over time, so you should expect
momentum. The valuation measures used refresh the 120-stock portfolio and ulti- that any successful investment process should
are different for non-financials vs. financials. mately turn the entire portfolio over once continue to evolve in order to consistently
Non-financials and financials both use P/E a year, on average. As new information thrive, including our own.
for a portion of the valuation ranking. For becomes available, we sell those stocks that Interested in learning more about this
non-financials, we add a combination of have sharply negative relative returns and strategy? Visit www.opusinc.com, follow the
P/B, EV/EBITDA and FCF yield to the mix, those stocks that no longer pass the screen, firm on Twitter and LinkedIn, or call (513)
while for financials we add a combination of and replace them with more recent higher 621-6787 for more information! n
P/TBV and dividend yield . ranking stocks that are not currently in the
About the Author
The most highly rated are added into portfolio.
Mr. Len Haussler, CFA is responsible for research
the portfolio (subject to sector weighting Conversely, winning stocks can run until and portfolio management for Opus investment
limitations) but, in fairness, about 25% of their valuations are so rich that they violate products. With more than 36 years of experience, Mr.
Haussler was the assistant treasurer and director of
the names are further eliminated based on our screen valuation discipline. Net-net, Investments at Cincinnati Bell Inc., before co-found-
fundamental analysis and our judgment/ we allow our winning stocks to run much ing Opus in 1996. While at Cincinnati Bell, he devel-
oped the investment policy for the Employees Benefit
investment experience garnered over the last further than we allow our losing stocks to
Funds and directed investments for more than $1 bil-
twenty years. This part of the process is more fall, and it is this asymmetry that helps us lion in assets. Prior to Cincinnati Bell, Mr. Haussler
art than science, and helps us eliminate com- generate superior performance for our cli- worked as the manager of planning and analysis for
the Mead Corporation, taught at the University of
panies that violate the spirit of the portfolio. ents while minimizing downside. Cincinnati and performed various accounting, audit
For example, companies that have earnings The result of our investment process is a and tax duties for Arthur Andersen LLP.
due solely to a one-time event, or that are highly-diversified portfolio of stocks that, in
About Opus Capital Management
making money currently due solely to some the aggregate, exhibit lower valuation, higher Opus Capital is a minority- and woman-owned
preferential tax treatment, are eliminated as quality and stronger price momentum vs. investment management firm based in Cincinnati,
OH. Founded in 1996, the firm leverages its expe-
part of the human side of the process. the micro cap benchmarks. rienced and dedicated team to provide investment
At this point, we want to acknowledge So how has all this worked so far over the solutions in the high-quality value equity space. With
its experienced investment team, Opus Capital offers
that many of the names in the portfolio will last three plus years that we have been imple-
separate account management and investment sub-
have uncertainties associated with them. menting this strategy? So far, the results are advisory services to a diverse group of public funds,
That is just fine by us we believe that tak- encouraging as seen in the above table. insurance companies, corporations, endowments,
foundations, registered investment companies, Taft-
ing advantage of such opportunities is a key As we would expect, the standard deviation Hartley plans, and high net worth individuals.
component in the success of a primarily (risk level) over this period of time has been
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.

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
an ICO, or token sale, will make money if the new
cryptocurrency or related technology becomes
popular and the tokens appreciate.
tors with additional comfort.
If the ICO concept still seems too big to get
your arms around, consider investing in a fund
whole new array of buzzwords has come our According to Enzo Villani, CEO of that is managed by experts that have a better
way. They include ICO, blockchain, tokens, Equities.com, an ICO thought leader, Many chance of choosing the winners. Boustead
cryptocurrency and smart contracts. My new organizations in traditional finance are Securities, a boutique investment bank, is help-
obsession is trying to figure out this whole researching and developing blockchain and ing some of these funds raise capital. According
ICO business and whether there might be cryptocurrency solutions as we speak. At to Keith Moore, the CEO of Boustead, While
an angle for my clients, who could either be Equities.com, weve seen a surge of crypto- there is much debate whether ICOs are securi-
investors in ICOs or the entrepreneurs that currency clients that are public and private ties, we believe that ICOs will ultimately be
sell tokens in an ICO to raise capital for their companies working on ICOs that are strate- considered securities transactions and have
companies. Given the hours of research that gic and add benefit to the markets. approached the ICO industry with the same
I have done, I thought it would be helpful to You can find a list of ongoing and pro- institutional approach we take with all offerings.
share with you what I have learned so far. posed ICOs on websites like ICO Tracker or We believe the benefits of blockchain technolo-
This article assumes that you have a basic through forums like Bitcointalk. Each ICO gy will drive down the costs associated with and
understanding of cryptocurrencies and block- will typically have an offering page, which improve transparency and disclosure of securi-
chain. If you dont, you may want to read The is a website page containing information on ties transactions and we are looking forward to
ultimate 3500-word guide in plain English to the offering. The offering page will typi- helping the industry with those benefits. n
understand Blockchain by Mohit Mamoria, cally include a link to a whitepaper for the
Mr. Bevilacqua is the founding member of Bevilacqua
which is the best beginners guide to crypto- cryptocurrency project which is analogous
PLLC (www.bevilacquapllc.com), a boutique trans-
currency and blockchain that I have found. to a prospectus in an IPO, except that the actional corporate and securities law firm. Mr.
contents of the whitepapers are not regulated Bevilacqua counsels companies of every size ranging
from entrepreneurs with just an idea to established
initiAl coin oFFerinG (ico) and the whitepapers tend to have less dis- companies whose securities trade on the NYSE or
closure about risks. The offering page will NASDAQ. He has broad experience representing
issuers in public offerings and private placements of
According to Smith + Crown, a research group also contain information about the project
securities (including private placements under Rule
focused on revolutionary technologies in the team, the goals of the project, a timeline, and 506(c) of the Securities Act, crowdfunding offerings
emerging field of cryptofinance, an ICO is an other useful information. If you desire to under Title III of the JOBS Act, and Regulation A+
offerings), Exchange Act compliance, angel and ven-
event in which a new cryptocurrency project sells invest in ICOs, I recommend that you find ture capital financings, other areas of equity and debt
part of its cryptocurrency tokens to early adopt- offerings that are covered by an independent financing and mergers and acquisitions.
Bevilacqua PLLCis a boutique transactional law
ers and enthusiasts in exchange for money today. research report. Smith + Crown maintains a
firm that understands entrepreneurs and provides
So, companies basically pre-sell tokens that fund curated list of ongoing and upcoming token goal oriented legal services that facilitate agreement
the development of a new cryptocurrency or sales and publishes summaries, profiles and and closure. Instead of being an impediment to
progress, Bevilacqua PLLC proactively finds solu-
related technology. Instead of paying cash in detailed research reports on different ICOs. tions that enable its clients to achieve their goals.
exchange for tokens, investors pay in a cryptocur- Given the lack of legislation in this area, In addition to having significant legal experience,
the firms founder is also a business person and
rency like Bitcoin or Ethereum. The investors in companies considering an ICO should fol-
entrepreneur and utilizes his business experience
low best practices. First, companies should to give context to the legal services that the firm
focus on transparency. The whitepaper provides. Bevilacqua PLLC handles all types of
public and private offerings of securities, including
should include the same type of disclosure equity crowdfunding (Regulation CF, Rule 506(c)
that a reasonable investor would want to and Regulation A), PIPEs and other Regulation
D and Regulation S private placements, registered
see before making an investment decision.
direct offerings and initial public offerings. The firm
Second, the founders should provide some also handles domestic and international mergers
proof that their technology is viable. Lastly, and acquisitions and joint ventures. The firm also
provides services in the areas of SEC maintenance
the use of an escrow account, where funds and compliance, general corporate, formation, equity
n BY LOUIS A. BEVILACQUA, ESQ. are released over time, is an additional deal incentive plans, reverse mergers, broker-dealer regu-
lation, venture debt and traditional loan agreements
feature that could be added to provide inves-
and similar matters.

PPMT Capital Advisors, Inc. DO WE HAVE
THE RIGHT BOARD STRUCTURE
AND MEMBERSHIP?
DO WE HAVE
THE RIGHT BROKER DEALER?
EXCLUSIVE?
WILL A SINGLE BD GET THE JOB DONE?
HOW CAN
WE RAISE CAPITAL MORE EFFECTIVELY?
WHAT
CAPITAL
10
STRUCTURE WORKS FOR MY
COMPANY? REG A, AN S1, OR DEBT?
QUESTIONS HOW CAN

THAT KEEP MICROCAP WE CONTROL LEGAL COSTS?
CEOs UP AT
NIGHT
WHAT IR
STRATEGIES REALLY WORK?
HOW HOW DO DO WE
MUCH WE FIND HAVE THE
SHOULD THE RIGHT CFO? www.ppmtgroup.com
MY AUDIT COST? RIGHT AUDITOR FOR
MY FIRM?
646-289-5358
Get the edge with PPMT insight and expertise!

info@ppmtgroup.com
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
Excellent Listening Skills are Essential to Providing

Exceptional Service
Were Listening
FitzGerald Yap Kreditor LLP provides high-level expertise, guidance, and legal representation to clients
ranging from small businesses and entrepreneurs to large public companies. Our attorneys know
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and leverage our experience to deliver unparalleled results.
Contact Lynne Bolduc

Phone: 949.788.8900 | Email: lbolduc@fyklaw.com | Fax: 949.788.8980
MicroCap Review Magazine 71
16148 Sand Canyon Avenue, Irvine, California 92618
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 Below are key take-aways from our panel:
optimism. Small-cap and microcap com- Small Cap IR Summit: New Ideas for
panies who demonstrate a willingness to Creating Interest & Value
step out of their comfort zones and try new
approaches to todays more innovative and be Visible:
cost-efficient capital raising methods will
reap the benefits. Leo Hinkley, Managing Director, Investor
As part of this years NIRI conference, Relations, BBX Capital said it best, If people
OTC Markets Group worked with the team dont know you exist, they cant buy you.
to organize and moderate a panel of industry His philosophy is to be featured on as many
experts dedicated to addressing the needs of screens as possible and to become as inno-
small cap IR professionals. vative as technology will allow. But, he
cautions this must all be done with an eye
5 tAkeAwAys FroM our towards compliance and remaining inside
sMAll-cAP ir suMMit the bounds of Reg. FD.
Your primary goal is to ensure that infor-
https://blog.otcmarkets.com/2017/07/05/5- mation about your company is easily acces-
takeaways-from-our-small-cap-ir-summit/ sible to investors. Take steps to establish
n BY JASON PALTROWITZ

a strong web presence post your IR Accessing Research: On behalf of the team at OTC Markets a
presentations and earnings presentations special thanks to my fellow panelists:
to your website, film analysts events, web- Everyone acknowledged that while research David Calusdian, President, Sharon Merrill
cast investor days and use social media to is vital to investors, it has become increas- Associates
amplify your corporate news and brand ingly difficult for most small-cap companies Leo Hinkley, Managing Director, Investor
messaging. to garner coverage. This shows that a more Relations, BBX Capital
novel approach is often needed to get to the Randy Renfrow, Partner, DePrince, Race &
Find your niche: desired result. First, look at the analysts Zollo, Investment Advisors n
that cover your peers and your industry/
Jason Paltrowitz, Executive Vice President -
When it comes to attracting buy-side inter- sector. They may be willing to meet with
Corporate Services
est, start by taking a hard look at your com- you to learn more about the industry and Jason Paltrowitz is Executive Vice President,
pany and your peers. Most firms operate deepen their knowledge. The sell-side can Corporate Services at OTC Markets Group, where
he is responsible for managing the firms interna-
under a specific mandate, so you need to do also prove to be another great access point. tional and domestic Corporate Services business.
your homework to determine which firms Look at smaller boutique banks or firms Drawing upon his expertise in cross-border trad-
ing and as a recognized proponent of Reg A+ and
might be a good fit for your company. that you aspire to work with, but be realistic
small company capital raising, Jason is an advocate
What is your companys valuation? Look about your short list and the timeline to get- for small cap issuers, start-ups, and entrepreneurial
at firms that have holdings in the small cap ting there. innovators working to alleviate the cost, time and
complexity associated with being a public company.
space Another option is to arrange meetings Prior to joining OTC Markets in October 2013,
Look at your sector whos investing in with Institutional Sales staff. They will often Jason was Managing Director and Segment Head
at JP Morgan Chase responsible for the custody,
your industry? bring forth and highlight shareholder ques-
clearing and collateral management business in the
Do you pay a dividend? Income-focused tions, which works well if you dont presently Corporate and Investment Bank division. Jason also
investors may be a good target for your have coverage. held multiple senior management positions at BNY
Mellon, most notably, as Head of M&A for the
company And lastly, quality sponsored research is Financial Markets and Treasury Services Sector and
Explore family offices vs. standard institu- often a favorable tool when looking to pro- 11 years as the Head of the Global Capital Markets
Group in the Depositary Receipt Division. Jason
tional portfolio managers vide investors with access to information
currently serves on the Board of Directors of the
Studies have suggested that for companies about your company. Look for reputable Crowdfunding Professional Association (CfPA) and
under $500 million, 80% of their stock was firms that leverage the same analysts to cover also served as a member of the Board of Directors
at OTC Markets Group from 2008-2011. Jason holds
actually held by retail investors making this their company-sponsored research who also a Bachelors degree in International Relations from
audience an organic fit and a key target for cover traditional coverage. OTC Markets Boston University and received his MBA from the
NYU Stern School of Business.
small cap companies. Groups research marketplace includes three
firms that should be considered by t compa- About OTC Markets Group Inc.
Make the most of your nies interested in generating coverage. OTC Markets Group Inc. (OTCQX: OTCM) oper-
ates the OTCQX Best Market, the OTCQB Venture
Event Calendar: Market, and the Pink Open Market for 10,000 U.S.
Watch out for Red Flags: and global securities. Through OTC Link ATS, we
connect a diverse network of broker-dealers that
With a new conference popping up on vir-
provide liquidity and execution services. We enable
tually a daily basis, its important to find There still a lot of sharks looking to prey investors to easily trade through the broker of their
the ones that are reputable and tailored to upon small companies. Thus, IR profession- choice and empower companies to improve the qual-
ity of information available for investors. To learn
the Small Cap market. Suggestions as to als need to keep their guard up, proceed with more about how we create better informed and more
some of the more popular events included: caution and take a more critical look at the efficient financial markets, visit:
www.otcmarkets.com.
LD Micro; Marcum; Sidoti; Virtual Investor opportunities with which they are presented.
OTC Link ATS is operated by OTC Link LLC,
Conferences and events sponsored by the For example, partners and vendors that are member FINRA/SIPC and SEC regulated ATS.
CFA Institute. reputable will want to get paid in currency/ Subscribe to the OTC Markets RSS Feed
Other tips included scheduling an Analyst dollars. If someone asks for stock in your
Day in conjunction with a group of com- company, rather than a check thats a red
panies similar to yours. This collective flag. One important suggestion is to care-
approach gives people a greater incentive fully read the about us and disclosure
to attend and helps make the most of their pages as a way to further examine the details
travel and itinerary. on exactly what these service providers are
offering.

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 their production for export such as Brazil the past three years is common for many
the Paris Climate Accord might be and Kurdistan. This is not supporting a microcap companies in the O&G industry
good for the Oil Industry but will higher price. due to market conditions but was it accom-
erode the price of oil even further as the per- In such an environment, where to invest panied by a reduction in SG&A? What was
ception is that drilling permits will become in the O&G industry becomes a difficult the internal company trends of wages and
easier to obtain. During the first week of dilemma. Much of the oil and gas industry compensation of top executives. If all have
June, Brent crude fell 1.8% to $49.71 a barrel has survived an especially tough few years reduced or stayed stable it is a good indica-
on Londons ICE Futures exchange and the with weak demand and low prices and it tion of management strategy and the health
West Texas Intermediate futures were trad- has been difficult for companies to make of the Company.
ing down 1.9% at $47.44 a barrel. strategic decisions and to plan for the future. Strategy of the Company: Is the company
The slides in price began when the favoring cash-flow versus investment? What
Organization of the Petroleum Exporting o&G inVestor 101 is the reserve strategy of the Company?
Countries (OPEC) and other major produc- What is the assets position of the Company
ers agreed to extend ongoing production Investing should not be a guessing game. especially active assets such as reserves and
cuts by nine months on May 25. However, Although there are forces beyond your control, equipment?
the messages sent by the various participants lets try to set up a logical approach to avoid Indebtness: What is the level of the debt in
were mixed and investors have expressed the big mistakes. What should I look for in a the Company. The large cap O&G companies
their concern about rising production. EIA microcap O&G company before I invest? have taken large loans over the past three
reported last week that U.S. average daily First some due diligence and understanding years but some of the Banks have called such
output hit its highest level since August 2015. the market trends. Are we in a positive market, loans and have reduced their exposure. What
The OPEC decision was widely anticipat- negative market, is there a lot of volatility, etc. is the position of your target microcap com-
ed but many investors were hoping that the What are the main components that could pany with respect to bank or financial insti-
producers would be even more aggressive as affect an investment. There are a lot of blogs tutions? Are loans in default and or being
they aim to work off a glut that has weighed on O&G that will give the temperature of the reimbursed? What is the overall indebted-
on the market for nearly three years. market at the time of an investment and will ness of your target company?
At the same time, Libya, a member of describe the global trends. Although no ana- Reserves: How do you know the value of
OPEC that is exempt from the agreement lysts have a magic wand, their knowledge of proven reserves vs unproven speculative
to cut production, is once again ramping up the market will provide the necessary under- potential reserves when examining your
output, according to its National Oil Corp. It standing of the major trends. investment strategy? Reserves are a big part of
seems that despite the upbeat declaration by My target company: You understand the an O&G stock balance sheet. A basic review
the Saudi Minister of Energy and his Russian trends now you have selected a company, is to make sure that the reserves are valued at
counterpart the market is being driven by lets try to dissect the information. For a the current market price of oil and not an old
supply & demand and the rising US oil sup- public company, it is easy -normally- The historical value that could throw off the real
ply is driving a lower price. A plethora of SEC.gov website allows you to access all value. Always try to understand the reserves;
producers outside of OPEC are pushing up public disclosures and statements as well as are these reserves currently in exploitation or
all financial reporting issued by companies. is it just a dormant investment, or specula-
A glance at the last 10K/ Annual report of a tive based on future expectations. n
couple of years and the last Quarterly report
I wrote this article myself in reviewing public dis-
(10Q Form) will start to describe the overall
closures, and it expresses my own opinions.
status of any company. Frederic Scheer is CEO of L6 Chemicals & Logistics,
Lets be a little bit more accurate and look an Oil trading company. He is also the CEO of Libra6
Management, Corp, a small private equity company
for the key factors of an O&G company that operating in new alternative technology, media and
will allow you to make an intelligent decision: chemicals. Scheer was the Ceo of several public com-
panies including Cereplast a biomaterial company,
Revenue and trends. Is the revenue grow-
n BY FREDERIC SCHEER the Cannon Group, an entertainment company and
ing or stable? A decrease in revenue over Imperials Hotels a hotel management company.

PROFILED COMPANY tsx: bkx, otc MArkets: bnkPF
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.
sedar.com and at www.otcmarkets.com. In
BNKs operations are focused on its 2016, the Company averaged 1,045 BOEs a
Tishomingo Field, located in the SCOOP day of production which generated positive
region of the SCOOP/STACK area of operating cash flow from continuing opera-
Oklahoma. The SCOOP/STACK region is tions of $5.2 million during the year where
currently among the hottest oil plays in the the average West Texas Intermediate Oil
United States. BNK has amassed over 16,800 price was $43.15.
acres in this project and has proved and In the Tishomingo Field, BNK originally
probable reserves of 42 million barrels of oil developed the Woodford shale formation
equivalent (BOE) from the Caney formation by drilling and participating in about 40
which are valued at $370 million per its last Woodford shale wells. The Woodford shale
reserve report dated December 31, 2016. In lies about 350 feet below the Caney shale
addition, its proved, probable and possible that holds BNKs current reserves. BNK sold
Operators in SCOOP and STACK Plays reserves were estimated at 66 million BOEs its acreage to XTO Energy (a subsidiary of
with a value of $695 million also per its last Exxon) for $147 million in 2013, but retained
reserve report. The reserves were evalu- its rights to develop the slightly shallower
ated by Netherland, Sewell and Associates, Caney formation. XTO Energy now owns
Inc. and are summarized in BNKs most over 280,000 acres in the SCOOP play and
recent Statement of Reserves Data and Other surrounds BNKs acreage. In addition,
Oil and Gas Information available at www. 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
BNK Drilling Rig #1

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
BNK Drilling Rig #2 BNKs netbacks increase to about $33 per
BOE for the quarter.
to produce from the deeper Woodford wells. accounting compliance. Ray Payne is the The Company also has a new financing
Therefore, its technical team has an excellent Vice President of Operations and his previ- agreement and existing oil hedges to minimize
understanding of the geology which makes ous job was with Marathon Oil Company fluctuations in cash flow going forward. In
the drilling risk lower by design. as Manager Drilling and Operations where June 2017, BNK announced a new $25 mil-
The Company has a very strong manage- he developed Marathons South Texas Eagle lion line of credit provided by BOK Financial,
ment team in place. Wolf Regener is the Ford shale asset, which in two years added which has a five year term and provides a
CEO and he has 30 years of oil and gas more than a billion barrels of reserves. lower interest rate compared to their previ-
experience in key senior executive posi- In late 2014, when oil prices dropped so ous loan. Gary Johnson, BNK CFO stated,
tions in a number of companies. He has dramatically, BNK quickly stopped its drill- The new line of credit will save the Company
had many different roles throughout his ing program. Since 96% of its acreage is held about $650,000 per year of interest expense,
career, including an extensive operations by production from the previously drilled assuming the line is fully drawn. We have
and finance background. BNKs CFO is Woodford wells, the Company did not have also lessened the impact from oil price swings,
Gary Johnson who is a CPA with over 25 to continue to drill wells to hold on to its as we have oil hedges in place for 75% of our
years of experience including his role at current acreage position. forecasted production from our existing wells,
Occidental Petroleum where he was Director Now that oil prices have somewhat recov- at an average of $61.55/barrel for 2017 and
of Technical Accounting. At Occidental ered from the lows of 2015 and 2016, the $53.72/barrel for 2018.
Petroleum, Gary was responsible for the Company has restarted its drilling program. BNK expects that the productivity of
companys public filings and worldwide According to Wolf Regener, BNK is cur- 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
BNK Drilling Rig #3

OPINION
Uranium Exploration and

Mining Public Companies
U
ranium exploration and mining Following the incident, Japan shut down putting new mine plans on hold. Most of the
public companies are a contrarian all 54 of the countrys reactors for safety new mines require $60/lb uranium to make
investors dream and theyre hiding checks. That took 13% of uranium demand money.
in plain sight. off the market. Reactors have been slow to Thats a problem for nuclear plants which
The feedstock for nuclear fuel, uranium come back. Five are on-line. Nearly 20 are are entering a uranium contracting cycle.
has been mired in a 6-year bear market scheduled to be back by 2019 and will ulti- They need to buy two years ahead of needs.
which has seen the price of uranium decline mately reach 42 powering the electric grid. 30% of their uranium needs for 2020 are not
over 85% from its peak to sit near a 12-year Negativity permeates the existing investor under contract and 75% are unmet by 2025.
low. narrative and is well captured in the price of Given new mines can take as long as a
The equities of uranium exploration and the commodity and reflected in stock prices. decade to come on line, and some existing
mining companies have been decimated. The reality based on the outlook for nucle- production is being shut down, there is a
The peak saw 500 companies, today there ar power and the laws of supply and demand pending supply shortage right around the
are just around 50. The stock prices of most paint a very different and optimistic picture. corner.
miners have declined by close to 90%. Nuclear power is here to stay. Its 11% of Miners need $60 to incent new produc-
The bear market began following a nucle- global electricity output and 20% of the USs. tion. The commodity is $20 today. Without
ar accident in March 2011 at the Fukushima Its a large-scale solution for solving many uranium, the lights go off. We think utilities
Daiichi nuclear power plant in Japan and countries poor air quality problems. will choose providing lights to its customers.
caused a tsunami which disabled the power Its growing - 60 reactors world-wide are This bodes very well for the uranium
supply and cooling system which triggered under construction totaling $750 billion in equity sector. n
three nuclear cores to meltdown. committed capital. Growth will be about 3%
Mike Alkin is the Founder and Director of Research
per year through 2035.
for The Stock Catalyst Report, an investment news-
Nuclear is carbon free, available 24/7, letter that offers investors the opportunity to join the
unlike wind or solar providing only intermit- journey in the search for value through the eyes of an
experienced former hedge fund manager.
tent power (when the wind is blowing or the Mike spent 20 years in the hedge fund industry.
sun is shining) and what comes as a surprise He worked for a few multi-billion dollar hedge
funds. During his career he was an analyst, portfolio
to many, its the safest form of electricity
manager and partner. At times, he was responsible
generation on a death per terawatt of energy for several hundred million dollars of capital and
produced. traveled to many countries throughout the world,
some places where many dont often look searching
A pending supply shortage is also good for mispriced industries and stocks.
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.
n BY MIKE ALKIN
Miners are shutting in some production and

PROFILED COMPANY tsx-V: Gxu, otc MArkets: GVxxF
Goviex uranium inc.

A Growing, Africa-Focused uranium company
G
oviEx offers its shareholders a a skilled labour force that resides in nearby Denisons African projects in exchange for
unique opportunity to be part of communities. GoviEx common shares.
the green energy solution. With One of the most compelling advantages of Toshiba Corporation owns Westinghouse
mine-permitted projects, outstanding miner- operating in Niger is its consistent and well- Electric Company, and their status as a major
al resources(1), a seasoned management team, developed mining and exploration permit- reactor vendor makes them a valued share-
and industry-leading shareholders, GoviEx is ting environment. The Madaouela Projects holder.
positioning its projects to take advantage of Environmental Permit was approved in Cameco Corporation, one of the largest
anticipated higher uranium prices that may July 2015 (approximately six months from uranium producers in the world, has been
be the consequence of, among other things, the date of the ESIA submission), and was part of the GoviEx story since 2008.
expected mid- to long-term uranium supply closely followed by Mine Permit approval Ivanhoe Industries became a GoviEx
shortages. in January 2016. Historically, the permit- shareholder in 2015, bringing the support
ting process for uranium projects in North of serially successful mining magnate Robert
oriGins America has taken anywhere from seven Friedland.
years to over two decades. The relative speed
GoviEx was founded by Govind Friedland, of the process in Africa is one of the reasons urAniuM suPPly-deMAnd GAP
son of internationally-renown mining entre- GoviEx focuses on African projects.
preneur Robert Friedland. While living in Mineral Resources Forecasts predict growth in uranium demand,
China, Govind became acutely aware of the GoviExs second mine-permitted project as China and India build new reactors, Japan
air pollution crisis that was devastating the is the Mutanga Project in Zambia. The re-starts their reactors, Europe maintains a
health of Chinas citizens. Falea Project in Mali is in the explora- stable level of nuclear power generation, and
Applying his business development and tion stage. GoviExs current projects have the U.S. becomes increasingly supportive of
geological engineer expertise, he explored the following combined mineral resources: nuclear energy. Low current prices mean that
the opportunities available for nuclear Measured Mineral Resources of 28.59 Mlbs new production cannot be incentivized, and
energy as a clean energy solution and the U3O8, Indicated Mineral Resources of 95.70 older uranium mines are reaching the end of
viability of uranium mining as a business. Mlbs U3O8, and Inferred Minerals Resources their life cycles. These factors are expected
GoviEx was born out of that exercise and of 73.11 Mlbs U3O8. to produce a supply-demand gap that should
acquired the exploration ground for what is drive the uranium price upwards.
now the mine-permitted Madaouela Project leAdershiP And industry
in Niger. suPPort www.goviex.com n
1
Certain scientific and technical information
MAdAouelA ProJect Daniel Major was appointed CEO of GoviEx
disclosed in this article related to GoviExs projects
in 2012. A mining engineer with 30 years of is derived from NI 43-101 compliant technical
The Madaouela Project is located adjacent experience, Daniel is leading GoviEx as it reports, which may be found on GoviExs website at
www.goviex.com, or GoviExs continuous disclosure
to Arevas existing uranium mines, which transitions from exploration to production. documents, which have been reviewed and approved
have been producing approximately 8% of GoviExs shareholders include some of the by Dr. Rob Bowell, a Chartered Chemist of the Royal
Society of Chemistry, a Chartered Geologist of the
the global uranium supply for almost 50 biggest names in the industry:
Geological Society of London, and Fellow of the
years. This proximity means that the project Denison Mines, a uranium exploration Institute of Mining, Metallurgy and Materials, who
is advantageously positioned with access to and development company, chose to focus is an independent Qualified Person under the terms
of NI 43-101.
existing roads, ground water, grid power, and on Canadian projects, so GoviEx acquired

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- dous. For years, weve been fighting the good
boomers who need it, but havent prop- fight, working to dispel the myths that have
erly planned for it, it leaves the governments loomed over this asset class. To help pro-
Medicaid program to pick up a growing tab. tect vulnerable seniors in this stage of their
In 2013, that meant Medicaid payments lives, state insurance regulators put in place
accounted for 51 percent of long-term care stringent consumer protections, including
expenses or more than $155 billion, accord- numerous consumer disclosures, disclosure
ing to a Kaiser Family Foundation report. of all offers, broker commissions, and alter-
The result is that any cuts intended to fix natives to selling a policy.
other problems in the health care system run Here are the facts about an industry that is
the risk of directly affecting seniors at their growing in prominence:
most vulnerable. The vast majority of life insurance
But, there is one potential way to save policies that are issued never result
some of that taxpayer money. The National in a benefit paid to beneficiaries.
Association of Insurance Commissioners An astounding 88% of universal life
(NAIC), has advocated for a source of long- policies are either lapsed or surren-
term care funds that had never been seri- dered prior to a claim, according to
ously tapped before: life insurance policies. statistics cited by the Life Insurance
Specifically, an exchange of life insurance for Settlement Association.
long-term care that has tax-advantages. The The life insurance secondary market
NAIC Long-Term Care subgroup has issued is designed to help seniors obtain
a policy report that included life insurance maximum value for life insurance
as a tax-advantaged exchange for long-term policies that are almost certain to
care for seniors who are struggling to pay for lapse or be surrendered.
their post-retirement care. This is done in Life settlements pay seniors an aver-
the secondary market, what many know as age of 4 to 11 times what they would
the life settlement industry. have received from the insurer for a
n BY CHRIS ORESTIS For those of us in the life insurance sec- surrendered policy, according to stud-
ondary market industry, this shift is tremen- ies conducted by the US Government

Accountability Office (2010) and the
London Business School (2013). The proceeds from the sale of a life insurance
At GWG Life alone, weve paid
seniors nearly $418 million to pur- policy that is no longer needed or has become
chase their policies over the past 11
years. Had those seniors surrendered
unaffordable can provide seniors with the liquid
their policies back to their insurance assets they need to fund the increasing costs of
company, they would have received a
tenth of what they received through long-term care.
GWG Life.
The proceeds from the sale of a life insur-
ance policy that is no longer needed or has new report. Other options listed include Chris Orestis, Executive Vice President of GWG
Life (www.gwglife.com), is an over 20-year veteran
become unaffordable can provide seniors traditional long-term care (LTC) insurance, of the insurance and long-term care industries and
with the liquid assets they need to fund the 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
increasing costs of long-term care. For many mium permanent life insurance, annuity- over 50 radio programs and in The New York Times,
seniors, a life insurance policy is the only long-term care products, and impaired-risk The Wall Street Journal, USA Today, Kiplingers,
source of income available to address this payout annuities. However, while traditional Investors Business Daily, PBS, and numerous other
media outlets.
critical need. LTC insurance was one of the most popular
As the only firm offering this kind of products among seniors only a decade ago, About GWG Holdings, Inc.
swap, GWG Life has launched the LifeCare rising costs have shifted that trajectory com- GWG Holdings, Inc. (Nasdaq: GWGH) the parent
company of GWG Life, is a financial services com-
Xchange Program (https://lcx.gwglife.com) pletely. According to the NAIC report, tra- pany committed to transforming the life insurance
with solutions that include benefits exempt ditional long-term care insurance sales fell industry through disruptive and innovative products
from Medicaid spend-down requirements 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
that can be used in this way to pay for long- in 2014. As well, while more than 100 carri- market called LifeCare Xchange (LCX). This new
term care and other health care costs. For ers offered LTC insurance in 2002, by 2014, capability provides seniors with the exchange value
of their life insurance policies they can apply to
many seniors, a life insurance policy is the only about a dozen insurers were continuing long-term care and other post-retirement needs.
only source of income available to address to offer LTC products. With LTC insur- GWG Life seeks to further transform the industry by
this critical need. applying proprietary M-Panel epigenetic technology
ance options dwindling fast, recognizing life
to disrupt traditional life insurance underwriting
Until now, broker-dealers who lacked the settlements as a viable, reliable alternative is practices. Since 2006 GWG Life has provided seniors
resources or initiative to complete due dili- more vital than ever. over $418 million in exchange value for their life
insurance and, as of March 31, 2017, owned a portfo-
gence regarding life settlements have kept At GWG Life, our mission has always lio of over $1.4 billion in face value of policy benefits.
this important asset class off the menu for been to help consumers and the financial For more information about GWG Holdings, Inc.
the advisors. The July endorsement from the emailinfo@gwglife.comor visitwww.gwgh.com.
services industry to understand life settle-
NAIC is expected to change all that. Already, ments and the unique value they can offer to
GWG Life has partnered with a growing seniors, especially to fund the rising costs of
number of advisors who understand that a long-term care and general healthcare. The
life settlement can be beneficial to seniors, as NAICs endorsement of life settlements as a
well as to their practice. way to pay for long-term careand the fact
These firms have done their diligence on that the committees report specifically cited
the secondary market and on GWG and GWG Lifes long-term care benefit plan that
have authorized their advisors to introduce we introduced to the market more than a
life settlements to seniors. Some advisors are decade agofeels a lot like a big win weve
holding local events to introduce the second- been fighting for. The best part of all is that
ary market to new potential clients, as well as the real winners are those who are the most
to other financial services professionals. We vulnerable of all: seniors who are in desper-
hope, for the sake of todays seniors, that this ate need of a source of income to fund the
momentum continues to grow. looming costs long-term care. Luckily for
Its important to note that life settlements them, the life insurance secondary market is
wasnt the only asset class discussed in the poised and ready to help. n

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 says, Robert Kaplan, Jr. Managing Partner of $5.00. ADOMs shares have traded consis-
close and begin to trade. The company, Elio Kaplan Voekler Cunningham & Frank. Reg tently traded near its 52-week high of $18.26
Motors (OTC: ELIO), has struggled. Initial A+, like most new regulations, is going to since its June 15th listing, with average daily
shares were offered to the market at $12, and take time. If you think back, it took a long volume of a respectable 120,000 shares.
the stock spent nearly six-months above $20, time for Reg D to be broadly adopted.
before its slow decline to $6.04, where it is Despite Elios challenges, issuers do not seem And last, but certainly not least is ShiftPixy
trading as of this writing. dissuaded from trying to raise capital via Reg (NASDAQ: PIXY), a California-based staff-
The result of Elios struggles and a lack of A+. 127 issuers have filed a Form 1-A over the ing company. PIXY offered its shares to
new listings, Reg A+s perceived value has past 12-months, indicating their intent to raise the public at $8.00, and began trading on
been tarnished. Furthermore, the investment capital via Reg A+. Of those, 104 have been the NASDAQ on June 30th. The shares have
bankers and lawyers that recommend deal qualified. While most of those qualified are in traded as high as $12.3, and settled to $9.22
structures have started to question whether the process of raising capital, only three have as of this writing. Average daily volume in
Reg A+ is a viable vehicle for a company closed and listed on a major exchange. excess of 1m shares daily is providing inves-
seeking to raise investment capital. Not so tors with ample liquidity.
Myomo (NYSE MKT: MYO), a commercial The short-term results are hard to beat.
stage medical robotics company, started the These three issuers are up a combined 100%.
June Reg A+ IPO boom by offering shares to Especially when you compare the returns to
the public at $5.00. The shares began trading this years two big traditional IPOs, Snap and
on the New York Stock Exchange MKT on Blue Apron. Blue Apron went publicat about
June 12th, shares traded as high as $23.19, the same time our Reg A+ companiid, but is
before settling to $12.43, as of this writing. currently trading well below its $10 offering
Daily trading volume has been an impressive price. Snap was a hit on its first day of trading
500,000 shares a day. in March, but has since been trending lower.
As of this writing Snap was trading at $15.69,
Adomani (NASDAQ: ADOM), a provid- 7% below its $17.00 initial offering price.
er of advanced zero-emission electric and So, what makes the latest Reg A+ IPOs
hybrid vehicles and replacement drivetrains, different than Elio? The first thing one
quickly followed MYO and offered shares at will notice is that these issuers elected to
n BY MIGUEL COLON, MBA

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-

PROFILED COMPANY
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 is, Does this trend represent an opportunity able activity. That includes the energy and
driving this growth, its clear that Keynes for MicroCaps- traditionally limited to dilu- basic materials sectors, which typical repre-
Animal Spirits are running wild! This tive ATM and convertible debenture transac- sent a high concentration of MicroCaps.
economic improvement has had a impactful tions- to change strategy and achieve signifi- Similar to 2016, the instrument types typi-
cross over effect on the private equity mar- cant high growth financing? And further, cally favored by PIPE investors have not
kets, pushing valuations to sky high multi- what are the best structures to consider? changed. Registered common equity and
ples and leverage ratios to levels unseen since We believe the Private Public Joint Venture, ATM transactions have led the way. Both
the pre-crash hay days. Undeployed capital or (PPJVP is the structure MicroCap CEOs tend to favor more mature companies with
chasing investments in privately held com- and their Boards of Directors should explore. market caps well in excess of $100M. These
panies has grown considerably. The question Capital overhang in private equity is cur- companies have the daily trading volume
rently over $700 billion. Yes, thats correct and VWAP profiles to allow companies to
$700 Billion. Based on recent PIPE (Private finance with these types of instruments with-
Investment in Public Equity) activity over out detrimental effect on share price. The
the last six months, some PE money is reality is that unlike the larger Small Cap
crossing over into the public markets. And PIPE issuers, many MicroCap companies are
yet, MicroCaps are still struggling to attract limited to selling shares at discounted prices
capital at competitive terms. with warrant coverage, or selling convert-
According to Placement Tracker ible debentures that convert at discounts to
(PlacementTracker.com), PIPE deal vol- market.
ume is down 2.8% (469 deals in H1 2016) We picked a few random examples from
and dollar volume decreased a massive 44% 2017 to demonstrate the effect of each major
($27B in H1 2016). A logical analysis of transaction type on sub $10M issues. Where
these numbers infers that PE managers have our analysis is not purported to be statisti-
two possible course of action: to start send- cally accurate for each transaction type, we
ing money back to investors, or get more highlight the results using common exam-
creative. ples of public issuers to examine the impact
PIPE activity was well distributed across of certain structures. The companies select-
sectors, with financials leading the way. ed were chosen randomly, and all informa-
n BY KARL B. DOUGLAS Many of the sectors which are typical main- tion used was publicly available at the time.
stays of private equity are showing consider- Our conclusions are not buy or sell recom-

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-
Figure 1 Placement Tracker August 2017 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
Figure 2 Yahoo Finance 6mo chart for MBII 8/11/2017 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.
Figure 3 Yahoo Finance 6mo chart for REED 8/11/2017

Given the heavy commitment by PE to the Generally speaking, the pubco nation of dilution, which has a detrimental
E&P sector, energy companies are uniquely initially has a minority position, impact on public shareholders, we believe
suited to the strategy. and may not have board control. the PPJV is a far more productive approach
This structure allows management teams However, this is not always the for raising capital.
to execute their business plans and create case. PPMT Capital recently attended the Planet
shareholder growth without excessive dilu- b. Potential double cost of man- MicroCap conference in Las Vegas in April
tion or technical erosion of market cap agement between Pubco and JV and test marketed the concept with attend-
due to oversupply of shares with insufficient management. ees, including representatives from the min-
liquidity. Over the years we have met hun- ing and energy sectors. We sat down with
dreds of MicroCap CEOs and their manage- Pros & cons For the Pe Chris Jones, CEO of Uranium Resources,
ment teams. In general, we see highly moti- inVestor: Inc, (NASDAQ CM: URRE). Uranium
vated managers that could execute exciting Resources, Inc. operates as an energy met-
plans if only they were adequately capital- 1. Pros als exploration and development company
ized. We believe the market is ready for a a. Built in exit option by electing and is developing lithium brine basins in
new transaction type, the PPJV or Private to convert JV equity interest into Nevada and Utah for exploration and poten-
Public Joint Venture. The PPJV brings both shares of the Pubco, or through tial development of lithium resources. Chris
the public company issuer and the private phased divestiture, the PE inves- felt that the PPJV would be an interesting
equity investor together in a symbiotic rela- tor has a built in public exit which way to accelerate transition to production of
tionship that meets the requirements of both can be phased over time. some of the companys larger reserves.
worlds. b. Higher exit value since the PE Jericho Oil Corporation, (OTC: JROOF)
company is converting, they are is developing E&P reserves in one of the
lets exAMine the Pros & eliminating the illiquidity spread most exciting basins in the US, the Stack
cons For the MicrocAP between private company and in Oklahoma. We were intrigued by the
oPerAtor: public company valuations. knowledge that Jericho was already leverag-
c. Greater financing flexibility a ing the PPJV strategy with a strategic family
1. Pros properly executed pubco listed on office relationship. As a prime example of
a. Non-dilutive Pubco sharehold- a major exchange offers cheaper an early adopter, well be tracking Jericho to
ers experience the benefit of equity financing opportunities, see how the impact of the PPJV impacts their
pubco share of the JV cash flow particularly in difficult credit development longer term. n
without excess dilution. market cycles. Access to S3 shelf
About the author:
b. Acquisitions are accretive to registrations can be a tremendous
Karl B. Douglas is a Managing Director at PPMT
pubco earnings. value. Capital Advisors, Ltd.., a private investment and
c. Financial stability - Commitment advisory firm. Mr. Douglas has a career that spans
over 30 years investing in private and public com-
of long term deep pockets of the 2. Cons panies. PPMT Capital invests and structures private
PE company. a. Transparency depending on equity and debt investments of $15M to $100M in
Energy, Mining, Industrials and Real Estate.
d. Easier access to low interest lever- structure of the JV, the PE com-
age. pany could end up with unwanted For further information contact:
e. Experience and expertise of PE transparency. kdouglas@ppmtcapital.com
800-401-9017
management particularly in the b. Higher costs depending on how www.ppmtgroup.com
M&A process. pubco costs are allocated, this
Note: This article is not an attempt to pro-
f. MicroCap management team can could reduce earnings at the JV
vide investment advice. The content is purely the
focus on building shareholder level. authors personal opinions and should not be con-
value, and spend less time raising sidered advice of any kind. Investors are advised to
conduct their own research or seek the advice of a
money. We believe that the pros of the PPJV struc- registered investment professional. The author does
g. Access to higher quality investors. ture significantly outweigh the cons for both not own shares or any equity or debt interest in any
companies mentioned in this article before or at its
h. Access to higher quality acquisi- issuer and investor alike. And this structure
publishing.
tion targets. could quite possibly become the next major
2. Cons trend in MicroCap investment as the con-
a. Non-consolidation of assets. cept gains popularity. With possible elimi-

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MicroCap Review Magazine 89
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- At the time, a lot of my peers and col- help you dance around and the questions
ly naive. That said, I used all sorts of colorful leagues took what I said as an insult. They that Google can easily answer, but the gener-
analogies to explain how the industry has yet thought that by saying that what we had built al idea is that regardless of which exemptions
to be born. Still in utero, not even in diapers to that point wasnt even yet born, I was say- you choose to raise under, now your private
yet, etc... ing that we hadnt accomplished much. The company can publicly solicit and take money
truth is, regardless of the reasons (which I from non-accredited investors. That is huge,
believe were MOSTLY out of our control), especially if you are already selling a product
we hadnt. We had very little to show for over the internet. (Listen to my episode of
ourselves. What good is a product that the Planet MicroCap Podcast with Bobby
nobody uses? Kraft!) What has been essentially created is a
But, I thought at least, that 2014 was much more streamlined and affordable path
the year. Big things coming! Again, I was to taking a company public.
insanely naive. I should have known better... OK, so the tech is ready and the regs are
being in technology and finance I knew that now usable. So why is this not mainstream
behaviors rarely change, and if they do, they yet?
take many, many years to do so. Its just a matter of time..were on the verge.
I believe that finally, that time has come. In the last year weve seen multiple deals raise
I started launching social fundraising sites millions of dollars and instantly list their
in 2009. That was before PayPal could companies on OTC Markets, NASDAQ and
even split a payment. Payment processors NYSE. Last year over 1,500 people came
like Stripe didnt exist. We needed escrow to our conference, Crowd Invest Summit,
accounts for the simplest forms of fundrais- to meet and invest in crowdfunded deals.
ing and even technology was a major hurdle. Three of those deals are now publicly listed.
Thats no longer the case. All those types of This year we expect that number to double. If
products exist in many forms right out of the youre an investor or a potential fundraising
box. Now its about orchestrating existing company, you need to be paying attention.
products to fit your mold, versus building a The time is now! n
product completely from scratch.
Alon Goren is a pioneer in the financial technology
Aside from technology and product hur-
sector and a founder of Crowd Invest Summit, the
dles being squashed over the years, the JOBS worlds largest Crowdfunding Conference and 805
Act passing created a new framework for sell- Startups a group of over 2,000 investors and entrepre-
neurs in Southern California.
ing securities over the internet. I wont dive
n BY ALON GOREN
into the details that only an attorney could https://crowdinvestsummit.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
Robert Kraft: 424 227 9018 / info@snnwire.com
www.planetmicrocapshowcase.com
@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
coMPAny ProFile on PAGe 10
lucaradiamond.com
TSX, BSE, OMX: LUC
1,109 carat Type IIa
Historic
Diamond Recoveries The Constellation
Diamond
in Botswana 813 carat, Type IIa
Second and sixth largest gem

quality diamonds ever recovered

Accounting Corner Column on Page 69
Accounting Corner Column on Page 23

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