Full Position Update

EDITOR’S NOTE: The timing was almost surreal. At exactly 3:03 PM CDT, not one minute after publishing last Friday’s alert, my wife came into my office and announced the news: “I think my water just broke.” Nine hours later, Paige Marie Bottarelli was born, healthy and vibrant as ever.

The days that followed have been a blur. Day and night have all flown together into one. As a result, there will be no new small-cap pick this week. Instead, I’ve asked Mark to give you a comprehensive position update on all of our current small-cap holdings. I think you’ll find this update very helpful going forward.

After all, some of our latest picks (notably GHM and SIRF) have blasted to new highs, while other long-standing picks like GMO, CHU and JASO continue to hit new 52-week highs as well. Below is an updated look at everything we own. I thank you for your understanding, and you’ll have a new small-cap pick next week.

Until then, here’s Mark with a full run-down of our holdings.

Sincerely,

Full Position Update

First off, I want to congratulate Bryan and his wife on the newest addition to their family. Speaking from experience, I’m sure Paige Marie will be an added blessing to the entire Bottarelli family. Blessings and warmest wishes!

Now, as Bryan mentioned above, we’re taking a breather this week and reviewing our entire small-cap portfolio. This will ensure that you fully understand the reason we’re holding every one of our current small-cap plays. As I have mentioned before, the key to successful small-cap investing is to build a portfolio that matures into your very own “mini-mutual fund.” I don’t recommend loading up on any one particular small-cap stock, but rather spreading out your investment dollars into a diversified mix of powerful companies operating in the best and brightest business segments. That’s exactly what we’re doing in Bottarelli Research Small Cap. So as a refresher, let’s look under the hood and get a full position update going into the final two months of the calendar year. Enjoy!

Big Cat Energy Corporation (BCTE.OB): Though down from my original recommendation, I stand firm on my conviction that BCTE’s Arid Tool is going to be a key method used by Coal Bed Methane producers in the very near future. The latest news of them teaming with Marathon Oil (MRO – NYSE) is not by accident. Their Arid Tool can save CBM companies huge amounts of cash, and I promise you, there are many eyes watching BCTE right now. Their future continues to look bright. Hold.

Nevtah Capital Management (NTAH.PK): This is a play on removing “heavy oil” out of the ground using their patented closed -loop technology. As oil prices get closer to $100 per barrel, producing oil from other methods (like oil sands and oil shale rock) are quickly coming into play, and NTAH gets you perfectly positioned to profit off this oil production shift. In fact, that’s why NTAH has been on the move recently. After 5 years, NTAH is now entering into the final phase before commercial production. The time for NTAH to shine is quickly approaching. With the entire country waking up to the fact that our domestic oil sands and oil shale could hold more oil deposits than all of Saudi Arabia’s oil fields, it’s about time we start cutting our dependence from OPEC and focus on what we have in our own backyard. I expect 2008 to be a huge year for NTAH — and I think the shares are an easy double (perhaps even more) from current levels. Hold.

China Unicom (CHU – NYSE): Our longstanding Chinese cell phone play continues to break new highs. Thanks to their rapidly growing list of 140 million mobile subscribers, we’re currently showing a gain of over 50%. Let’s lock in these profits by selling half of this position now. Then, simply let the second half of your position ride for more upside.

Cereplast (CERP.OB): This is our pure play on biodegradable plastics. As you know, the explosion of plastic containers is creating an environmental catastrophe like never before, and that makes a very strong case for a shift over to biodegradable products. Not only that, but since petroleum is used in producing conventional plastics, it’s easy to understand why oil prices nearing $100 a barrel create such a big problem. As one of the leading Bio-Plastic and “green toy” manufacturers, CERP will certainly benefit from the global push for their biodegradable plastic products. I’m very bullish on the company, but we’re still very early to the party. Let’s be patient. Give this one room to catch on and run. Hold.

Metalline Mining (MMG – AMEX): This is one of my favorite small-cap holdings, which is a pure play on zinc. As I’ve mentioned before, zinc ranks fourth in world metal consumption behind iron, aluminum and copper. It’s used as a rust inhibitor — and it’s also used to coat steel. A typical car, for example, uses about 22 pounds of zinc — and after years of over-supply, the zinc market now faces a supply deficit like never before. In fact, zinc supplies right now are at their lowest levels since 1991! That’s why I love MMG. They’re currently drilling a zinc project that’s over 2.5 times the size of Manhattan! Not only that, but they’ve also discovered deposits of copper and silver in this deposit — making it a world-class project that’ll soon be ready to begin the all-important commercial phase. I truly believe that MMG is going to be one of those stocks that we look back on with a great big smile. Folks, this tiny company could be sitting on the largest zinc deposit in the world, and we all stand to make a lot of money with this company. I urge you to add to your MMG position at these levels.

Polymet Mining (PLM – AMEX): Along the same lines as MMG, Polymet Mining could also turn out to be one of the biggest mining finds in our lifetime. I have followed this company for years, and their deposit contains just about every base metal you can imagine. Make no mistake about it. PLM is one of the very best small-cap commodities plays you can buy, and I believe this could be a 10-1 return by 2009. Be certain you own this company going into 2008.

General Moly (GMO – AMEX): Formerly known as Idaho General Mines, GMO is another unique play in the commodities arena focused entirely on molybdenum. Used in steel, cast iron, and super alloys to enhance hardness, strength, toughness, wear, heat, and corrosion resistance, molybdenum is a critically-important resource for the growth of industrial-based economies. And guess what? GMO is sitting on two of the world’s largest undeveloped molybdenum projects! Without exaggeration, GMO could become the largest (and cheapest) producer of molybdenum in the country. And since they’re mining in Nevada, you have no geopolitical risk. The stock just hit another new high this past week, but the upside is far from over. You could make a small fortune with this one alone. Bryan and I have already taken 100% out of our initial recommendation, but that return will be dwarfed by what’s coming your way. If you have yet to own any GMO, take advantage of any price dips and add some to your portfolio. You’ll be handsomely rewarded.

JA Solar Holdings (JASO – NASDAQ): This has been another huge winner for us. Since we originally told you to buy JASO under $23.00 per share, you’re now close to a 200% gain. By now, you should have taken your original seed money off the table — which means you’re enjoying a free ride on the remainder of your JASO shares. I admit, my original forecast of $65 per share is now looking a bid too conservative. Nevertheless, let’s continue to ride JASO for all it’s worth.

Solarfun Power Holdings (SOLF – NASDAQ): I think of SOLF as the “little sister” of JASO. The investing thesis is completely the same: Polysilicon, which is the raw material used in solar panels, continues to experience record-breaking demand, and companies like JASO and SOLF used their IPO proceeds to lock up this important raw asset for many months. Without a doubt, I’d be buying SOLF at these levels. It can easily follow JASO and blow through its old highs, especially since 2008 looks like a huge year for solar plays. If you did not get into JASO, then be sure to own SOLF.

WorldWater & Solar Technologies (WWAT.OB): This has been another huge winner in our small-cap ledger, and it’s easy to see why. WWAT offers you a wonderful combination of two powerful market sectors: Solar and Water. We’ve already booked over 150% on this play, but I’m telling you, the gains are far from over. Just this week, WWAT agreed to merge with Entech, a high-tech supplier of solar technology for NASA. They also signed an agreement with Prime Solar Senergy to further strengthen the burgeoning Spanish solar market. Based on these developments, I’m upping my guidance on this company. Instead of forecasting $8.00 per share inside 2 years, I’m now sticking my neck out and saying that we’ll see prices hit $18.00 within two years. That’s a 700% gain from current levels! Companies like this do not come around too often, and I want to be sure that you’re along for the ride.

Basin Water (BWTR – NASDAQ): This is a pure play on groundwater contamination. Water is going to be the next oil, and BWTR designs, builds, and implements systems for the treatment of contaminated groundwater, waste water reduction, and resource recovery. We’ve already seen some nice gains here, but there’s a lot more to come. Be patient with BWTR, and by all means, add some to your position if you do not currently own any.

Graham Corp. (GHM – AMEX): All I can say here is, “Wow!” GHM was recommended on October 1^st, and we’ve already seen the stock move up 52% from last month’s entry price. Now I admit, the company is not too exciting. They’re a global supplier of ejectors, pumps, condensers, and vacuum systems that are used in the petrochemical, oil refining, and electric power generation industries. Talk about dull! But when you consider the global expansion we’re seeing today, it’s easy to understand why GHM’s critical operational components are in such massive demand. With such incredible short term gains in your hand, let’s go ahead and lock in half of your profits anywhere between 25% and 50%. It just makes sense. Then, hold the remainder of your position for more gains. Also keep in mind that GHM is doing a 5-4 stock split, meaning you will receive one additional share for every 4 you own before November 30^th.

SiRF Technology (SIRF – NASDAQ): SiFR was one of our newest recommendations that popped right away. They’re the leading provider of GPS-enabled silicon and premium software location platforms, meaning they make the chips found in the “guts” of today’s GPS devices. They just reported fantastic earnings which pushed the stock aggressively higher — and I don’t see the demand for their chips slowing down leading into Christmas. We’re already up 20% in less than a month, so let’s ride this new wave of GPS technology as far as we can. Bryan and I will tell you when it’s time to take profits, but for now, continue to hold your position.

Oceanfreight (OCNF – NASDAQ) & Star Maritime Acquisition Corp. (SEA – AMEX):

These are our two small-cap dry bulk shippers. As you know, the run on dry bulk shipping has been incredible, and I have no doubt that both SEA and OCNF will be tremendous winners for us. Global expansion means that commodities are needed in every country around the planet, and ships are the only way to transport these much-needed commodities around the globe. There is absolutely no slowdown for global raw materials, so please use any dips to add to each position.

Energy Trusts: Canetic Resources Trust (CNE – NYSE), Provident Energy Trust (PVX – NYSE) & Advantage Energy Income Fund (AAV – NYSE): These are our three Canadian Energy Trusts. Not only are these income investments (paying out huge returns over CDs and a declining dollar), but since their holdings are in both oil and natural gas, they also offer great stock price appreciation. Oil and natural gas are set to soar yet again, I can not think of a better place to put my money. Plus, all three of these trusts pay you monthly just for doing business with them! What a deal!

Yellowcake Mining (YCKM.OB) & Uranium Resources (URRE – NASDAQ): These are our two uranium plays. YCKM is a uranium explorer involved with Strathmore Mining. URRE is a uranium producer with almost 100 million pounds of uranium in New Mexico. In fact, URRE is one of the best uranium plays out there. With oil approaching $100 a barrel, you better believe that uranium will once again become an attractive energy source, so I urge you to own at least one uranium play in your small-cap portfolio. If you must choose between the two, URRE just hit another new high this week, so you definitely want to own this one.

Lighting Science Group (LSGP.OB): This is an early play on the global push for LED lighting. Everywhere you look, environmentally-conscious consumers are replacing their conventional light bulbs with earth-friendly lighting — and LSGP designs and sells energy-efficient and environmentally-friendly lighting solutions based on its proprietary Optimized Digital Lighting technology. Their products are focused around low bay fixtures for parking garages and industrial facilities. This is a huge market, yet only a handful of companies are involved in outfitting this market segment. Although the stock has not moved up as I had expected, I firmly believe that 2008 is going to be a great year for LSGP. The time to pick up shares on the cheap is now.

Echelon Corporation (ELON – NASDAQ): When it comes to energy conservation on a global scale, one of the most promising companies your investment dollars can buy is ELON. The concept behind this little gem is a term called “Negawatt.” You see, energy consumers across the world are beginning to realize that certain actions (like shutting off air conditioners for short periods of time) help to create a hypothetical unit of saved energy. As a result, these saved energy units — called negawatts — are created, allowing millions, perhaps billions, of energy savings on a global scale. And that’s where Echelon comes into play. They produce over 90 products that apply the negawatt model to conserve energy — and these products are currently used in the U.S., China, France, Germany, Hong Kong, Italy, Japan, Korea, the Netherlands, and the United Kingdom. We originally entered ELON for $22.74 per share and it zoomed up to $31.84. But the recent market pull back has dropped shares all the way down to $18.50, which is a fantastic level to enter or add to your position. Prices won’t be this low for too much longer, so please take advantage of this dip.

Melco PBL Entertainment (MPEL – NASDAQ): You already know about the incredible upside gains of Las Vegas Sands (LVS – NYSE) and Wynn Resorts (WYNN – NASDAQ). Well, the next company in line to open a major Chinese casino in Macau is MPEL. Since Macau is the highest-volume gambling center in the world, there is certainly more than enough demand to support more casinos. And since MPEL is strategically located closer to the airport than LVS or WYNN, you better believe that they’re ideally positioned to capture a large chunk of this massive gambling market. We entered MPEL on July 23^rd for $12.15 and it quickly shot up to $19.09. Currently trading for $14.50, let’s hold the position for more upside gains.

Torrent Energy (TREN.OB): This is another Coal Bed Methane company that’s getting ready to begin commercial production in the State of Oregon in early 2008. They were recently approached by Marathon Oil (MRO – NYSE) to buy them out, but the offer was too low and TREN rejected it. Then, at their investment conference in August, TREN’s CEO told everyone that they were in talks with another possible company. That means we have two upside triggers on the horizon: Commercial production beginning early next year and a possible buy-out offer. Let’s sit back and let the upside fireworks begin!

Raptor Networks Technology (RPTN.OB): Although this company is below my initial recommendation, they are still very worthy of owning. They’ve developed the world’s first “distributed core” network switching architecture — which is faster, easier to use, and more cost-effective than any product Cisco currently has available. They already have contracts with the Department of Defense, and they’re also getting sales in Vietnam, Germany and throughout Europe. Therefore, I would not be surprised to see someone come in and try to buy the company out. I stand firm with my investment in this company, so let’s continue to hold.

Crystallex International (KRY – AMEX): This is a veryunique gold play out of Venezuela. The only thing holding this company back is getting the licenses and permits from the government to get their mining site up and running. They have proven and probable reserves estimated at 16.86 million ounces of gold, which could lead to a huge payday for us the moment the Venezuelan government gets with the program. Stay tuned on this gem because it could blast off at any time.

US Geothermal (UGTH.OB): Another big winner!Our top small-cap geothermal play is now ready to start it’s very first 13-megawatt geothermal power plant. It’s expected that this plant will be online during Q4 of 2007, and this will continue to drive stock values higher. We’ve already taken half of our gains off the table, so hold the remainder of your position for more gains!

And this leads us up to the small-cap positions that we’ve recommended beginning in September. Since the original reports on these newest recommendations are still up-to-date, you can access the information on these picks by logging onto the Members Area of the Bottarelli Research Web site.

You’ll find information on Beacon Power (BCON – NASDAQ), a company offering “Flywheel” technology we’re calling the next-generation power grid. For only $2.00 per share, BCON offers you substantial upside potential with minimal downside risk. Hold.

You’ll also find the full write-up on Isis Pharmaceuticals (ISIS – NASDAQ), which is in rally mode thanks to the enormous potential of the world’s first antisense drug. These guys are a buy-out candidate for virtually every Big Pharma company in the world, so hold for more gains.

You’ll also learn about Skins (SKNN.OB), which is a small, emerging company that could soon launch footwear that we’re calling “the next Crocs.” This is an explosive play leading into Christmas, so continue to hold.

And don’t forget about the great gains we’ve made in Sinovac Biotech (SVA – AMEX), the China-based vaccine producer. Leading into flu season, SVA continues to look strong. Hold.

Then there’s Origin Agritech Limited (SEED – NASDAQ), the Chinese hybrid seed producer and Terra Nostra Resources (TNRO.OB), the China-based copper and stainless steel producer. Lately, there have been unfound rumors that TNRO is operating a fake business, but I’ve been in contact with the company, and these rumors are false. Unfortunately, these rumors were started by stock scammers that were purposely trying to disseminate bad news to push TNRO’s share price lower, so don’t believe this garbage.

And finally, last week’s pick was China Precision Steel (CPSL – NASDAQ), with no new updates to report.

With that, you’re now up to date with everything we currently own! I hope this comprehensive update helps you get a better understanding of the investing thesis behind every one of our small-cap holdings. All together, these companies offer you a very unique blend of some of the most explosive opportunities in the entire small-cap sector, and I look forward to bringing you many more winners in the future!

Have a great week everyone!

Sincerely,

Sincerely,