Puda Coal (PUDC.OB)

Dear Bottarelli Research Member,

Let me start off by saying that it’s an absolute pleasure to begin this small cap journey with you. Small cap research is a passion of mine – and working with Bryan on this exciting new venture has been a life’s dream.

My goal is simple: On a weekly basis, I want to uncover that special group of small cap stocks that make uncommonly high returns for you.

And when I say “uncommonly high” returns, I’m talking about the type of money that could make a huge difference in your life or the lives of your children.

For the very first time, you now have access to this information here in our exclusive inner circle known as Bottarelli Research Small Caps, and I’m excited to share with you a different way of investing. I think you’ll really like what you see.

I received an interesting question from a new reader that said, “Your small-cap letter is quite an amazing story – is it true?” The answer, quite simply, is a resounding “yes.”

A little background: Back in 1999, I was Bryan’s first subscriber to his very first options letter – and I quickly learned that his methodology was incredible. Time after time he hit profit zones unlike anyone else I’ve ever seen before, and I quickly learned that his picks made me money very consistently. I instantly recognized his talent – and when we met face-to-face at an event in Baltimore in 2001, I presented him with something I felt could increase his performance. This was the invitation to join my inner circle of investors.

In the years that followed, we shared with each other valuable investing information that you simply cannot put a price on. He brought profitable information to me, and I brought equally profitable information to him. We both prospered. But more importantly, we became very good friends, and this allowed our relationship to grow even further.

After years of witnessing the explosive nature of my small cap picks, Bryan always wanted to join forces and start a letter. And after 6 years of talking back and forth, I finally agreed.

But make no mistake: I’m not interested in sharing my painstaking research with the entire world. I am willing, however, to share it with a small group of like-minded people, all working towards the same goal. So please, as we begin this new venture, I wish to maintain the same sort of “open-source” profit relationship that I have with Bryan by extending this information exchange on to you as well.

I’m quite positive you won’t hear this from any other newsletter editor in the country, but I feel this is a very important issue – one that separates Bottarelli Research from everything else. Do not hesitate to e-mail me with your questions, comments, or ideas. I’d love to hear them. And I will always respond to you. You can reach me at mark@bottarelliresearch.com.

This is exactly what I mean by “like-mined people striving towards the same goal.” As I’ve learned, Bottarelli Research prides itself in keeping our membership numbers small – and providing the absolute best service to a small inner circle of valued members. This will not change. In fact, I want Bottarelli Research Small Caps to be your top investing resource on the Web, because the rare combination of outstanding service and outstanding research will make you a happy and prosperous subscriber. After all, one thing I learned from the home building business is that if the customer is not happy, then you have nothing except a pile of wood. So once again, I’m privileged and honored that you’re the newest member to our group. Straight from me to you – let me offer you a hearty “welcome aboard!”

Now before I go any further, I want to hammer home an important point. Please do not share this information or my methodology with others. Learn it for yourself. Profit off it. Teach it to your children. But please don’t distribute this information to anyone outside of our group. I consider it very critical that we all keep this information between only us.

I find this critical because, as you know, some small cap stocks will have a small float and we do NOT want to tip our hand to anyone. The way I like to buy these stocks in an undetected way is to nibble away by using something I call the Rule of 3s. That is, you buy one third of a stock to open up a position, and then you buy another third on any dips. And then, if momentum starts to push prices higher, you buy the final third. And as the share price begins to move higher, it’s then “lock and load” time, as Bryan says!

But enough small talk from me. Let’s dive into this week’s play!

In terms of the big picture, Bryan and I have been talking all week about a pullback in the markets. Over the next two weeks we may encounter selling pressure, as we both feel the markets are quite extended. But for you, any pullback spells timely entry prices into our little small cap gems. So keep this in mind and scale into each position accordingly.

For today’s bulletin, I’d like to highlight five (5) of the best picks that I feel you should enter next week. After all, we have a number of open positions right now – so you’re probably wondering which ones to buy. Of all our open picks, below are the ones that I consider the best of the best. Bryan will add thoughts on his favorites as well.

But first I’d like to introduce a new pick – one that I have not recommended until today.

I truly believe now is the time to begin buying this gem as the demand for their product has been all over the news. In fact, the demand for steel in China and India alone is breathtaking, and that’s not even accounting for the other emerging countries in that region. My friends, once you see what their last earnings were over 2006, you’ll agree that this play’s potential is truly stunning. And I do mean stunning.

Now is the time to strike before the herd picks up on it, but remember: Please do not tip your hand. Nibble away here by adding a half position. We can always add more later on as the momentum picks up. In the next year, I think we could see this unique little gem give us more than a double. The company is Puda Coal (PUDC.OB). Buy it under $1.90, add to it on dips, and I feel you’ll have some rather juicy profits.

I’ll let Bryan get into Puda Coal in his section below, but first allow me to quickly run through the picks that I feel represent quality small cap names to own as we begin our journey together. Here are the open positions that I consider the best five buys right now…

PICK #1: Boots & Coots International Well Control (WEL – AMEX)

Boots & Coots International Well Control provides a suite of damage-control services to onshore and offshore oil and gas exploration and development companies across the globe. They were the guys in Kuwait leading the effort to put out the hundreds of oil well fires set by Iraqi troops in the first Gulf War. This work cemented WEL’s reputation as the premiere oil well firefighting company in the world. They were also selected by the U.S. Department of Defense for control and restoration of Iraq’s southern oilfields in March of 2003. Chart-wise, WEL has pulled back and it is now oversold in my eyes. If you review my initial recommendation on April 20^th, you’ll see that these guys are a cash cow! A few hundred dollars could go along way here, so WEL is a buy under $2.20.

PICK #2: Upstream Biosciences (UPBS.OB)

The more I read about this company, the more I like it. I believe they will deliver us some big gains – and soon. This company will give the medical profession the ability to understand the effects of certain prescriptions on patients before they’re even administered. According to the Journal of the American Medical Association, each year 100,000 people die in the U.S. due to adverse reactions to prescription drugs.

Their proprietary “data mining pipeline” technology enables Upstream to locate and analyze genetic variations in certain regions of DNA – and these diagnostic tests can aid in the early detection of cancer by identifying individuals with disease susceptibility.

Best of all, a classic crossover happened right before your eyes. It occurred last week, and like I mentioned to Bryan, it seems like it was meant to be. That is, the launch of Bottarelli Research Small Caps and the simultaneous new crossover and breakout on UPBS? What timing! If you want to see $500 grow quickly, then Upstream Biosciences (UPBS.OB) is one to own now under $1.55.

PICK #3 (TIE): Raptor Networks Technology (RPTN.OB)

PICK #3 (TIE): Yellowcake Mining (YCKM.OB)

There is a tie for my third favorite open position, so I’ll give you both RPTN and YCKM.

Raptor Networks Technology (RPTN.OB) is a stock that I call a “buy now or say goodbye” play. I cannot emphasize enough how important this company and their products are going to be, but I do know that the stock will start to climb as the coverage from the herd comes in. This little dynamo is a high-potential, early-stage company with big, big numbers. Their quarterly revenue growth (year over year) has increased 742.90% and their technology has been winning awards for “Best Switching Solution of the Year” for ease of use, cost, and overall performance. What they do is not exciting, per say, but they are a fast-growing company that could steal a tremendous amount of market share from industry heavyweights like Cisco Systems (CSCO – NASDAQ) or Juniper Networks (JNPR – NASDAQ).

Raptor designs, produces, and sells switching technologies for inter-networking systems. In other words, they make those black stackable machines that are stored in the basement of the world’s major corporations that keep the most intricate computer network equipment running. What differentiates them is their high performance 1-Gigabit and 10-Gigabit ethernet switches that allow elements from any network to be geographically distributed near the users or devices they serve. In other words, Raptor’s ethernet switching is what the PC was to mainframe computing. To their customers, that means 100 times the speed of conventional switches at about one-third the price. And here’s the kicker: Capturing just a 5% share of their smallest market segment would grow Raptor into a +$500M business. Considering that their market cap today stands at $120.66M, you can only imagine their potential share price increase if they multiply their market cap by five and trade at 6 to 7 times earnings. Raptor Networks Technology (RPTN.OB) is a buy under $1.75.

Yellowcake Mining (YCKM.OB) is an American-based resource company dedicated to the acquisition and development of potential uranium properties within the United States. Uranium that is used as fuel for generating electricity in nuclear power reactors worldwide – and the acceptance and implementation of nuclear power – is growing stronger by the day. This leads to unprecedented demand for uranium and heavy investor interest in the companies that own and develop it. I have done some intensive digging into this play, and I’m here to tell you that this one could blow the top off of anything to date. By the way the stock is moving, I cannot help but tell you to add this to your arsenal now. It may run faster than anything you’ve ever seen.

In fact, Yellowcake just received another permit to start drilling on their site. This is very significant because they are “in bed” with Strathmore Minerals. If you have not heard of them, these guys shot up in excess of 1,000%.This is great for us because you better believe that Strathmore knows there is Uranium in this area – and the drills start to turn in July. And that’s the thing: Now is the time to own these guys — before the drills start to turn and the results are out.Buy YCKM now under $3.50, but like I mentioned, nibble away – and I do mean nibble. Do not tip our hand!

PICK #5: Big Cat Energy Corporation (BCTE.OB)

And finally we have Big Cat Energy (BCTE.OB), a remarkable new company that just went public on November 6^th. Right out of the gate, the stock nearly doubled, but since then it has pulled back. I wholeheartedly believe the rally has just begun.

What they’re offering to coal bed methane companies is truly fantastic. After extensively researching this tiny company, I firmly believe their technology is a huge step forward for both coal bed methane companies and for the safety of the water they use. This new technology is called ARID, short for Aquifer Recharge Injection. From my research, ARID could be the future of coal bed methane recovery, and BCTE owns the sole rights to the technology. Big Cat Energy Corporation (BCTE.OB) is a buy under $3.25.

As a final note, I’d like to take our position on Harmonic (HLIT – NASDAQ) off the table here. I have made some nice profits on them over the years, but I hoped it would have bounced this past week. Not so. This reaction tells me that it’s just not the time for these guys and their IPTV technology. At least not yet. I may revisit this one at a later date, but for now let’s close the position. We have bigger fish to fry.

And with that, I’ll turn it over to Bryan. I know he has a lot to say about our launch and things to come. So once again, welcome aboard and get ready. In the weeks and months ahead, you’re truly in for some of the most unique little gems you’ve ever set your eyes on. Have a great weekend and enjoy!

Sincerely,

Full Year Revenues Increased 166%
Full Year Adjusted Net Income Climbed 123%
And Shares Trade for Only $2.10

Need I Say More?

A typical small-cap alert will contain some commentary from Mark and myself, followed by the week’s newest pick. But today, both Mark and I wanted to extend this week’s alert and summarize everything we have going right now – just to get you off on the right foot. So for today, I’ll begin with my analysis of Mark’s new pick on Puda Coal (PUDC.OB). Then I’ll transition over into a few open positions (that did not make Mark’s Top 5) that I particularly like right now. And I’ll close off by summarizing everything we currently have open. This way, you’ll be able to kick-start your small-cap membership the right way: By hitting the floor running!

So let’s get started!

Puda Coal is China’s leading supplier of high-grade metallurgical coking coal – and it’s this metallurgical coking coal that is used for the purposes of steel manufacturing.

A ten-second coal lesson: As you may or may not know, coal is made up from partially decomposed vegetable matter in the presence of moisture and the absence of air. Subjected to variations in temperature and geologic pressure over time, the end result is coal.

The chemical compounds that make up the various forms of coal are unstable when subjected to a high degree of heat. So, when coal is heated at high temperatures in the absence of air, the complex organic molecules break down to yield gases. “Coke” represents the substance formed when coking coal is heated in a coking oven at a very high temperature in the absence of air – and it’s this coke that’s critical in the development of steel. In fact, around 66% of the world’s steel production is based on coal. The biggest market for coal is Asia – which accounts for 56% of global coal consumption. Of course, China is responsible for a large portion of this percentage.

Many countries do not have sufficient natural energy resources to cover their energy needs. As a result, countries like Japan, Chinese Taipei, and Korea must import massive amounts of steam coal for electricity and coking coal for steel production. And thus, since the demand for steel is non-stop, so is the demand for coal. After all, when you consider the Chinese real estate market, it is said that the rest of the world has exported their bubble to China. As long as the real estate boom continues, so will the demand for steel – driving the demand for coal.

What’s more, there is an even greater upside catalyst coming for China in the form of the 2008 Summer Olympics. In way of comparison, steel demand rose strongly in Japan in the 1960’s and in South Korea in the 1980’s. Both of these instances, as you probably have guessed, were sparked by the Olympic Games being held in those countries. So right now, the consumption of steel in China is expected to continue expanding ahead of the 2008 Beijing Olympics and the World Exposition Shanghai in 2010.

Looking specifically at Puda, they possess 2.7 million metric tons of coking coal annually. Management believes this makes them the largest coking coal company (in terms of capacity) in Shanxi Province – which provides 20-25% of China’s coal output and supplies 50% of China’s coke. In short, Puda’s business outlook looks rather promising and their industry position is quite strong. And like Mark said, their numbers are staggering. Check this out:

For the quarter ended December 31^st 2006, Puda’s total revenue was $43.4 million. This represents a 110% increase from the $20.7 million they recorded in the fourth quarter of 2005. Sales of cleaned coal were 548,000 MT versus 267,000 MT in the same period last year. Over the course of one year, Puda’s full year revenues increased 166% and their full year adjusted net income rose 123% to $12.5 million. Best of all, Puda is projecting full year revenues in 2007 to come in between $210 to $220 million, with full year 2007 operating income between $34 million and $36 million. With growth like that (not to mention $24.9 million in cash versus $13.5 million in long term debt), Puda looks like an absolute steal anywhere under $2.10 per share. Let’s add this fast-grower to our small cap ledger immediately.

PLAY: Buy Puda Coal (PUDC.OB) at or under $2.10 per share, good for the week.

In addition to Puda Coal (PUDC.OB), I’d like to quickly highlight the current small cap recommendations that I’m particularly bullish on. Mark’s Top 5 picks (above) are definitely the best ones to enter immediately, but if you are interested in positioning yourself in even more small cap picks, then here four (4) of my favotires…

PLAY #1: Idaho General Mines (GMO – AMEX)

Idaho General Mines is a pure play on molybdenum, which is a necessary alloy in all steels. It is principally used in steel, cast iron, and super alloys to enhance hardness, strength, toughness, and corrosion resistance – making molybdenum an important resource for the growth of all industrial based economies.

Idaho General is currently developing the world-class molybdenum deposit located in Eureka County, Nevada. Not only that, but GMO also acquired its second largest molybdenum project (called the Hall-Tonopah project) in Nye County, Nevada.

The billion-ton Mount Hope molybdenum deposit in Nevada is the cornerstone of Idaho General’s growth potential. In fact, Mount Hope is one of the largest molybdenum projects at the permitting stage and is truly one of the great metal deposits of North America! With 1.3 billion pounds of recoverable molybdenum and a 50+ year mine life, the stock looks like a play you’ll own for years to come. Make no mistake, GMO shares are a buy under $6.50.

PLAY #2: Uranium Resources (URRE – NASDAQ)

When we first recommended Uranium Resources on March 23^rd, it was a bulletin board stock. But now it’s moved over to the NASDAQ. This is an extremely bullish sign – proving that URRE is quickly becoming a company that is attracting many, many new investors. As a result, it has a lot of room to move up.

Based in Texas, Uranium Resources engages in the acquisition, exploration, development, and mining of uranium properties in the United States. According to the World Nuclear Association (WNA), worldwide uranium production since 1990 has satisfied only 51% of the demand – which is driving the cost or uranium higher and higher. As a result, this has helped UURE’s revenue numbers to go absolutely gangbusters. In Q4 2006, for example, revenues grew almost 350% to $2.9 million from $835,000 in Q4 2005. Looking ahead, the company’s future strategy is to adopt a strategic plan with the goal of becoming a 10 million pound producer of uranium by 2014. As part of its strategy, URRE intends to build its uranium base between 200 and 300 million pounds through exploration of its own properties and by acquisition. And this alone will be the catalyst for pushing URRE’s stock valuation higher and higher. Right now, URRE is a buy under $9.50.

PLAY #3: Dendreon (DNDN – NASDAQ)

Here’s one for the true thrill seekers! As you probably know from reading our “Wish I” report, DNDN was a stock we recommended on January 19^th for $3.27 per share. Shortly thereafter, DNDN quickly moved all the way up to $25.00 per share and we took half of our profits off the table. This past Tuesday, when we officially launched Bottarelli Research Small Caps, you could have entered DNDN for around $15.10 per share. And as I write you today, DNDN has hit a high of $21.81, good for a gain of 44% already!

Here is the source of this tremendous momentum: On May 15^th, the FDA will rule on DNDN’s prostate cancer vaccine called Provenge. What you are seeing now is a tremendous amount of buying interest leading up to this announcement – and we want to ride this upside momentum for all it’s worth. The original catalyst that quadrupled the shares came on March 30^th when an expert FDA panel gave their opinion (rather unanimously, in fact) that clinical data showed that Provenge is both safe and effective. As I mention in your “Wish I” report, Provenge is truly a revolutionary prostate treatment that addresses a huge and critical unmet medical need. If the FDA gives DNDN an approval letter, it’s likely that shares of DNDN will once again soar. And this decision will be announced on May 15^th.

As a result, Mark and I recommend holding shares of DNDN to partake in any upside move. And don’t be afraid to take profits on half of your position leading up to this announcement. Remember: Mark and I will give you buy recommendations and guidance on all your small cap plays – but the ultimate management of these plays (including the decision to sell) comes at your discretion. If you’re looking at a big gain leading up to May 15^th, don’t be afraid to limit your exposure and take half of your profits off the table! Nobody will ever question you for taking a 44% gain in less than a week, so if you like your gains here consider selling half!

Now this is important: If you own DNDN stock, we also recommend that you own protection in the form of the DNDN June 10 Puts (UKO RB). These puts act as a buffer to any sharp stock price corrections that could occur on announcement day. By owning both shares of DNDN and the June 10 puts, you are covered no matter what happens on May 15^th. I rate both DNDN and the DNDN June 10 Puts (UKO RB) as a buy. We’re already into DNDN for $3.27 and $15.10 with the opinion that a positive FDA announcement could push shares up to $25.00 or $30.00 in a matter of days. Perhaps even hours. Come along for the ride!

PLAY #4: Polymet Mining (PLM – AMEX)

The catalyst here is a huge deposit of base metals that the company has been working on for a number of years. They’ve been busting their backs to get the necessary applications and permits to mine these metals, but in the next couple of months everything should be signed, sealed and delivered. And that, I feel, could lead to renewed buying interest in PLM stock. You see, as PLM gets closer to the permit signing, it’s going to move aggressively to the upside. So the key is to own the shares before any of the press releases come out. The key component for PLM is their 100% interest in the NorthMet Project, a polymetallic project covering 10,560 acres located in northeastern Minnesota. It’s one of the largest undeveloped non-ferrous metal projects in the world located in an active iron range – which tells you that the economics are favorable for large-scale potential with copper, nickel, cobalt, and precious metals. That makes Polymet Mining a buy anywhere under $3.75.

Of course, you can access every one of our past small cap alerts in the Members Area of bottarelliresearch.com. But for a quick position review, here is a roster of our 2007 small-cap positions:

Stock	Buy Date
CDC Corp. (CHINA – NASDAQ)	Friday, January 12, 2007
Dendreon (DNDN – NASDAQ)	Friday, January 19, 2007
Idaho General Mines (GMO – AMEX)	Friday, January 26, 2007
Big Cat Energy Corporation (BCTE.OB)	Friday, February 02, 2007
DivX (DIVX – NASDAQ)	Friday, February 09, 2007
Provident Energy Trust (PVX – NYSE), Advantage Energy Income Fund (AAV – NYSE), Canetic Resources Trust (CNE – NYSE)	Friday, February 16, 2007
China Unicom (CHU – NYSE)	Friday, February 23, 2007
Raptor Networks Technology (RPTN.OB)	Friday, March 02, 2007
Polymet Mining (PLM – AMEX)	Friday, March 09, 2007
Yellowcake Mining (YCKM.OB)	Friday, March 16, 2007
Uranium Resources (URRE.OB)	Friday, March 23, 2007
Crystallex International (KRY – AMEX)	Friday, March 30, 2007
Harmonic (HLIT – NASDAQ)	Friday, April 06, 2007 (sold)
Minera Andes (MNEAF.OB)	Friday, April 13, 2007
Boots & Coots International Well Control (WEL – AMEX)	Friday, April 20, 2007
Upstream Biosciences (UPBS.OB)	Friday, April 27, 2007
Puda Coal (PUDC.OB)	Friday, May 04, 2007

Small-Cap Pick: Puda Coal (PUDC.OB)

So once again, welcome to Bottarelli Research Small Caps. I look forward to a fun, rewarding, and profitable relationship.

Sincerely,