June, 2015 | Volume 35 – Issue 6

Research Reaps CHEAP Investor Winners Subscribers continually ask how The CHEAP Investor manages to find so many big-name stocks that soar. The short answer is lots of research. It takes time and effort to find a quality stock that is selling near its low when the market is at record highs. But finding a fundamentally strong stock before Wall Street discovers it, is our “secret” formula for giving our subscribers some amazing profits.

In the past we’ve had superstars, such as PetSmart (PETM), which went up 3,220% from our recommendation when it was bought out at $83 a couple months ago. Then there’s CarMax (KMX), which soared an impressive 4,733% and our all-time record breaker, PrePaid Legal, which skyrocketed 5,141%.

This month, Nautilus (NLS), a well-known manufacturer of exercise equipment, hit a new high of $22.16. That’s an impressive 1,339% from our $1.54 recommendation in the January 2012 issue. (We also recommended the stock in the October 2012 issue at $2.57 for a 762% increase.)

Nautilus is a good example of how a name company can be a great investment, if you buy it at the right price. It was a Wall Street favorite selling at $28 a share in 2005. However, Nautilus suffered hard times in 2009, and its stock struggled for several years. We recommended the stock in 2012 because we could see signs of a turnaround, and the $1.54 price was very attractive. By the October 2012 issue, Nautilus posted a good increase in revenues and had returned to profitability, so we recommended it again at $2.57.

Over the next couple of years, Nautilus continued to restructure and has reported excellent growth in both revenues and earnings. At its new high of $22.16, it is back on Wall Street’s “Buy” list. In fact we just saw an article from a research firm (that will remain nameless because we don’t want to embarrass them) explaining why it will be tough to beat Nautilus as a growth stock. The article stated:

Finding a great growth stock can be a tough task. Not only are there a wide range of choices, but the space can be extremely volatile and fraught with risk as well. But thanks to our new style score system we have been able to identify a few growth stocks which have incredible potential in the near term.

One such company that stands out in this regard is undoubtedly Nautilus Inc. (NLS). Not only does this company have a favorable growth score, but it is ranked as a buy too. And while there are numerous reasons why NLS is so attractive right now…

Seems to us, this research firm’s recommendation is just jumping on the bandwagon. The stock has already skyrocketed more than 14 times from our $1.54 recommendation price. We bet our subscribers will make a better profit than investors who buy Nautilus at $22.

Speaking of soaring stocks, we had several hit new highs this past month. USA Technologies (USAT), a buy in the November 2013 issue at $1.58, more than doubled to $3.36 or +113%. Axcelis Technologies (ACLS), recommended at $1.74 in the June 2014 issue, rose 83% to $3.19. Koss Corporation (KOSS) jumped 74% to a high of $3.50 from our buy in March at $2.01. We recommended Planet Payment (PLPM) at $1.59 in the December issue. It increased 65% to $2.63. Bill Mathews

The Cheap Investor Newsletter – June, 2015 2

MeetMe, Inc. NASDAQ Stock Symbol – MEET Price: $1.63

MeetMe® is the leading social network for meeting new people in the US and the public market leader for social discovery. The network makes it easy to discover new people to chat with on mobile devices. With approximately 80% of traffic coming from mobile and more than one million total daily active users, MeetMe is fast becoming the social gathering place for the mobile generation. MeetMe is a leader in mobile monetization with a diverse revenue model comprising advertising, native advertising, virtual currency, and subscription. MeetMe apps are available on iPhone, iPad, and Android in multiple languages, including English, Spanish, Portuguese, French, Italian, German, Chinese (Traditional and Simplified), Russian, Japanese, Dutch, Turkish and Korean.

The stock was a Wall Street darling in January 2011, when it sold at $15 a share. Since the price has fallen almost 90% from that high, we wanted to take a look at the Company. MeetMe has a decent balance sheet with $17 million ($0.38) per share in cash, a book value of $2.05 per share and debt of $4 million. Insiders own approximately 22% of the 45 million shares outstanding, and 44 institutions own about 33% of the float (shares in public hands). Institutions purchased 100,000 more shares than they sold for the quarter ended March 31, 2015. The negative factor is that the stock price has been in a downward trend.

MeetMe’s first quarter shows a good increase in revenues and earnings versus a large loss a year ago. The

results for the period ended March 31 are shown below. Buy Recommendation

First Quarter 2015 2014 Revenues $11,628,976 $9,503,504

Net Income (Loss) 722,054 (3,423,361)

Net Income (Loss) Per Share 0.02 (0.09)

Avg. Shares Outstanding 45 Million

Geoff Cook, Chief Executive Officer of MeetMe, commented, “During the quarter we achieved the highest sequential mobile traffic growth we’ve experienced in more than two years, and exceeded an average of one million mobile daily users for the first time in company history. On a sequential basis, mobile daily users increased 12% and mobile monthly users increased 15% in the first quarter, and year over year, mobile daily users increased 33% and mobile monthly users grew 44%. We believe this significant growth in traffic reflects our success in growing Chat engagement. Last October, we first achieved the milestone of 20 million chats in a single day. Since then, we have reached that milestone three times in November, seven times in December, and 83 out of the 90 days in the first quarter, illustrating our momentum in the quarter. We have a deep product pipeline planned focused on improving the quality and relevance of the connections we facilitate, as well as on enhancing our freemium and subscription offerings.”

David Clark, Chief Financial Officer of MeetMe, added, “With continued growth in engagement, we are seeing solid financial results. We grew total revenue during the quarter 22% on a year over year basis to $11.6 million. Mobile revenue comprised 71% of our total revenue for the quarter, the highest contribution in our history, and up from 49% a year ago. We also increased adjusted EBITDA (Earnings Before Interest, Taxes,

MeetMe, Inc.

The Cheap Investor Newsletter – June, 2015 3

Depreciation and Amortization) significantly on a year-on-year basis to $3.1 million, resulting in a record 27% adjusted EBITDA margin.”

With the popularity of social networks to meet new people, MeetMe could be an interesting speculation. If the Company continues its revenues and earnings growth trend, the stock has the potential to move at least 50 to 100% from this level. It could also be an acquisition candidate.

The stock can be followed daily through Internet quote services. For more information contact: MeetMe, Inc., 100 Union Square Drive, New Hope, Pennsylvania 18938 or call 1-215-862-1162. The Website: http://www.meetmecorp.com.

Paragon Offshore, PLC NYSE Stock Symbol – PGN Price: $1.80

Paragon Offshore is a global provider of offshore drilling rigs. Paragon's drilling fleet includes 34 jackups, including two high specification heavy duty/harsh environment jackups, and six floaters (four drillships and two semisubmersibles). Paragon's primary business is contracting its rigs, related equipment and work crews to conduct oil and gas drilling and workover operations for its exploration and production customers on a dayrate basis around the world. The Company has operations in Mexico, Brazil, the North Sea, West Africa, the Middle East, India, and Southeast Asia.

The stock started trading on August 4, 2014. It opened at $11.21 and shot to a high of $17.04. Then the price started to fall, skidding more than 90% from that high. We think Paragon is very attractive at this low level. It has a fair balance sheet with $86 million ($1 per share) and a book value of $5.80 per share. Insiders own about 2% of the 85.5 million shares outstanding, and 248 institutions own 84% of the float. The major reason the stock plunged is that institutions sold as crude oil prices fell. In fact, institutions sold 23 million more shares than they bought for the quarter ended March 31, 2015. The major negative is Paragon has a total debt of $2.1 billion. While drilling companies have huge debt, this seems extremely large. However, it is offset by the fact that the Company is profitable.

The revenues and earnings for the first quarter ended March 31 are shown below.

Buy Recommendation

First Quarter 2015 2014 Operating Revenues $430,648,000 $514,590,000

Net Income 61,158,000 124,566,000

Net Income Per Share 0.69 1.47

Avg. Shares Outstanding 85.5 Million

“In the midst of a challenging environment, Paragon delivered another strong quarter of operational results with unpaid downtime below 2% and cost control efforts well underway,” said Randall D. Stilley, President and Chief Executive Officer. “We also successfully concluded the Prospector acquisition and fully repaid the outstanding Prospector debt using our revolving credit facility. In addition, we added $108 million of contract

Paragon Offshore, PLC

The Cheap Investor Newsletter – June, 2015 4

backlog during the quarter, demonstrating that customers continue to value Paragon's safe, reliable, and efficient standard fleet.”

During the quarter, Paragon added approximately $108 million in backlog related primarily to previously disclosed new contracts and extensions in the North Sea and West Africa. In the North Sea, the Paragon HZ1 received a contract extension from early July 2015 to late August 2016 at a dayrate of $142,000 while the Paragon C463 received a new contract with GDF SUEZ for 225 days beginning late January 2015 at a dayrate of $130,000. Finally, the Paragon C20052 received a contract award for 75 days at a dayrate of $170,000 and a new contract from early July 2015 to late August 2015 at a dayrate of $145,000. In West Africa, the Paragon L782 received a new contract from late May 2015 to mid-September 2015 at a dayrate of $90,000 while the Paragon L783 received a contract extension from early March 2015 to early May 2015 at a dayrate of $129,000.

Mr. Stilley concluded, “Despite recent improvements in oil prices, conditions in the offshore drilling space are likely to deteriorate further during the remainder of 2015. Dayrates may head lower, driven by a variety of supply and demand factors; and we believe the industry will see additional contract renegotiations and outright contract cancellations. Our approach to navigating these turbulent waters includes the following actions: (1) reduce operating costs and capital expenditures to preserve contract drilling margins and liquidity; (2) refinance the debt we assumed as part of the Prospector acquisition; (3) aggressively pursue new contracts by utilizing our position as the low cost provider of offshore rigs; (4) continue to evaluate additional opportunities to strengthen our balance sheet; and (5) above all else, maintain our focus on being the high-quality, safe, and low-cost offshore drilling contractor - a key differentiator for Paragon.”

Paragon Offshore is a speculative stock that could perform well as crude oil continues to recover. The stock recently moved up from $1.25 in April to $2.05. The stock moved because, even though revenues and earnings were down from a year ago, the results beat analysts’ estimates for both revenues and earnings.

There are two positive factors – the Company added $108 million in contracts, and net cash from operating activity was up significantly, from $130 million in the fourth quarter to $210 million in the first quarter of this year. If Paragon returns to growing its revenues and earnings, the stock has the potential to move 50 to 100% over the next couple of years.

The stock can be followed daily through some major newspapers or through Internet quote services. For more information contact: Paragon Offshore plc, 3151 Briarpark Drive, Suite 700, Houston, Texas 77042 or call 1-832-783-4000. The Website: http://www.paragonoffshore.com.

Galena Biopharma, Inc. NASDAQ Stock Symbol – GALE Price: $1.33

Galena Biopharma is a development-stage biopharmaceutical company developing and commercializing oncology therapeutics that address major unmet medical needs across cancer care. Its commercial products include Abstral, a sublingual tablet that is used for the management of breakthrough pain in patients with cancer; and Zuplenz, an oral soluble film for use in the prevention of emetogenic chemotherapy-induced, radiotherapy-induced, and post-operative nausea and vomiting.

The Company’s lead product candidate is NeuVax (nelipepimut-S), which is in Phase III clinical trials for use in the prevention of recurrence in early- stage and node-positive breast cancer with low to intermediate human epidermal growth factor receptor (HER2) expression; Phase IIb clinical trials in combination with Herceptin that is used for HER2 1+/2+ node-positive and high-risk node-negative breast cancer treatment; and Phase II clinical trials in combination with Herceptin for use in HER2 gene-amplified breast cancer treatment. Galena Biopharma has a strategic development and commercialization partnership with Dr. Reddy's Laboratories Ltd.

The Cheap Investor Newsletter – June, 2015 5

for NeuVax in breast and gastric cancers.

It also develops GALE-301 (folate binding protein), which is in Phase IIa clinical trials that is used for the prevention of recurrence in patients with ovarian and endometrial cancers; and GALE-401 (anagrelide controlled release), which has completed Phase I clinical trials that is used for the treatment of patients with myeloproliferative neoplasms to lower elevated platelet levels.

The Company has a fair balance sheet with $53 million ($0.33 per share) in cash, a book value of $0.37 per share and a small debt of $7.5 million. Insiders own about 6% of the 162 million shares outstanding, and 100 institutions own approximately 20% of the float. For the quarter ended March 31, 2015, institutions purchased 14.4 million more shares than they sold.

The major negative is the price is in a downward trend, mainly due to an April financing at $1.46 a share. With 162 million shares outstanding after that April financing, there is always a chance of a reverse stock split.

The Company’s first quarter financial results for the period ended March 31 are shown below.

Buy Recommendation

First Quarter 2015 2014 Net Revenue $2,750,000 $2,173,000

Net Loss (10,537,000) (2,536,000)

Net Loss Per Share (0.08) (0.02)

Avg. Shares Outstanding 136 Million*

*Shares outstanding are now 162 million after a financing in April.

“We achieved two critical milestones thus far this year with completion of enrollment in our Phase 3 PRESENT trial and the closing of a public offering to solidify our balance sheet,” said Mark W. Schwartz, Ph.D., President and Chief Executive Officer. “Together, these events demonstrate Galena's near-term and longer-range value proposition as we continue to advance the Company's development and commercial operations to capitalize on significant treatment opportunities within the oncology setting.”

Dr. Schwartz continued, “Completing enrollment and over-enrolling our PRESENT trial is a major accomplishment for Galena. We are now focused on treating and monitoring the 758 patients in this Phase 3 trial as we progress towards our event-driven, interim analysis at the end of this year or in the first quarter of 2016. The ongoing advancement of our NeuVax and GALE-301 programs showcase the significant potential of our cancer immunotherapy programs that are designed to harness the power of the immune system to prevent a patient's cancer from returning. To do this effectively, we are treating women in the adjuvant setting whose immune systems have returned to a healthy status after having received their cancer treatments, giving NeuVax and GALE-301 the best opportunity to make a difference.”

Dr. Schwartz concluded, “Dovetailing the clinical successes during the quarter, the financing that we secured in March was an important achievement for Galena as it provides us the flexibility to advance our development programs and to strengthen our commercial efforts. Our immunotherapy platform has multiple clinical trials ongoing and we look forward to key data readouts from these trials over the next year. Meanwhile, on the

Galena Biopharma, Inc.

The Cheap Investor Newsletter – June, 2015 6

commercial front, Abstral sales remain on target, our oncology presence continues to grow, and we reiterate our full year guidance of $15-$18 million for 2015. Additionally, we are now preparing to launch Zuplenz in July, adding a second, supportive care commercial product to our oncology-focused sales portfolio. In total, we have established a strong foundation with our development programs supported by our commercial franchise, and we remain committed to the growth of our company.”

Galena Biopharma is an interesting, but speculative development-stage biotech. The Company has two products that have been approved by the Food and Drug Administration (FDA) and several other products in various stages of FDA trials. With its current cash burn rate, Galena Biopharma should have enough cash for about a year and a half before it will need to find more working capital. Several large institutions purchased shares in the Company’s latest offering. A class action lawsuit was filed in April, but that seems to be typical of what happens when a stock’s price falls. We think Galena Biopharma has the potential to move at least 50 to 100% from this low point. If it gets good news on one of its drug candidates in FDA trials or announces a partnership with a major pharmaceutical company, the stock could move considerably higher.

It can be followed daily through Internet quote services. For more information contact: Galena Biopharma, Inc., 4640 SW Macadam Avenue, Suite 270, Portland, Oregon 97239 or call 1-855-855-4253. The fax number is 1-503- 400-6611. The Website: http://www.galenabiopharma.com

Commercial Vehicle Group, Inc. NASDAQ Stock Symbol – CVGI Price: $6.24

Commercial Vehicle Group, Inc., together with its subsidiaries, designs, engineers, produces, and sells various cab related products and systems in North America, Europe, and the Asia/Pacific regions. The Company provides its products and systems for the commercial vehicle market, including the medium-and heavy-duty truck market; the medium-and heavy-construction vehicle market; and the military, bus, agriculture, specialty transportation, mining, industrial equipment, and off-road recreational markets.

It operates in two segments, the Global Truck and Bus, and the Global Construction and Agriculture. The Global Truck and Bus segment offers seats and seating systems, such as mechanical and air suspension seats, static seats, bus seats, and military seats, as well as seats for medium-and heavy-duty trucks; and aftermarket seats, and parts and components. It also provides trim systems and components for the interior cabs of commercial vehicles comprising vinyl or cloth-covered appliqués, armrests, map pocket compartments, carpets, and sound-reducing insulations; instrument panels; headliners/wall panels; storage systems; floor covering systems; sleeper bunks; grab handles and armrests; privacy curtains; and plastics decorating and finishing products. In addition, this segment offers cab structures, sleeper boxes, body panels, and structural components, as well as bumper fascias and fender liners; and mirrors, wipers, and controls.

The Global Construction and Agriculture segment provides electronic wire harness assemblies that function as current carrying devices used to provide electrical interconnections for gauges, lights, control functions, power circuits, powertrain and transmission sensors, emissions systems, and other electronic applications on a commercial vehicle; and panel assemblies and cabinets.

Commercial Vehicle Group, Inc.

The Cheap Investor Newsletter – June, 2015 7

Commercial Vehicle Group was recommended in the January issue at $6.79, since it was a former Wall Street high flyer selling as high as $20 in April 2011. The stock moved up slightly from our buy and then fell to this eye-catching low level. We like the stock for the longer term, and after reviewing its excellent first quarter financials, we think it is time to recommend it again.

The Company has a solid balance sheet with $81 million ($2.79 per share) in cash, a book value of $2.06 per share and $250 million in debt. Insiders own 14% of the 29 million shares outstanding, and 98 institutions own 73% of the float. For the quarter ended March 31, 2015, institutions sold 1.3 million more shares than they bought.

The greatly improved revenues and net income results for the first quarter ended March 31 are shown below.

Buy Recommendation

First Quarter 2015 2014 Revenues $220,303,000 $198,071,000

Net Income (Loss) 3,593,000 (508,000)

Net Income (Loss) Per Share 0.12 (0.02)

Avg. Shares Outstanding 29.1 Million

Rich Lavin, President and CEO of Commercial Vehicle Group, stated, “We are pleased with our first quarter sales growth and corresponding improvement in operating income. We continue to benefit from robust medium and heavy duty truck production in North America. Our Global Truck and Bus Segment increased sales by 20% despite the adverse impact of weather related disruptions in parts of the U.S. to some of our customers' production schedules. Conversely, the global markets for construction and agriculture equipment for which we manufacture products were flat to down as compared to the prior year period. We did, however, increase our Global Construction and Agriculture Segment sales in the first quarter as compared to the prior year period by 3% before giving effect to the burden of foreign currency exchange translation.”

Tim Trenary, Chief Financial Officer of Commercial Vehicle Group, stated, “Operating income for the first quarter improved to $11.2 million compared to $5.4 million in the prior year period, an operating income margin of 5.1% and an improvement of 230 bps over the first quarter of 2014. Operating income pull through on the incremental sales was within the range we generally expect. SG&A spending was modestly lower than the prior year period even as we invest in value accretive activities that support our long term strategy, CVG 2020.”

Management estimates that 2015 North American Class 8 truck production levels will be in the range of 300,000 – 320,000 units compared to 297,000 units in 2014. If Commercial Vehicle Group continues its turnaround, it has the potential to move 50 to 100% over the next year or two. At this level, it’s an attractive acquisition target.

The stock can be followed daily through Internet quote services. For more information contact: Commercial Vehicle Group Inc., 7800 Walton Parkway, New Albany, Ohio 43054 or call 1-614-289-5360. The Website: http://www.cvgrp.com.

USA Technologies, Inc. NASDAQ Stock Symbol – USAT Price: $3.08

USA Technologies is a leader of wireless, cashless payment and M2M (Machine to Machine) telemetry solutions for small-ticket, self-serve retailing industries. ePort Connect® is the Company's flagship service platform, a PCI-compliant, end-to-end suite of cashless payment and telemetry services specially tailored to fit

The Cheap Investor Newsletter – June, 2015 8

the needs of small ticket, self-service retailing industries. USA Technologies also provides a broad line of cashless acceptance technologies including its NFC-ready ePort® G-series, ePort Mobile™ for customers on the go, and QuickConnect, an API Web service for developers. USA Technologies has been granted 87 patents; and has agreements with Verizon, Visa, Elavon and customers such as Compass, AMI Entertainment and others.

We recommended USA Technologies in the November issue at $1.58, and it doubled to a high of $3.16 this past month. The Company’s second quarter and six-month financial results for the period ended December 31

are shown below. Update – Buy at Lower Price

Second Quarter Six Months 2014 2013 2014 2013 Total Revenues $12,820,937 $10,570,514 $25,073,539 $20,693,572

Net Income (Loss) Applicable to Common Shares

(260,915) 409,191 (564,097) 370,619

Net Income (Loss) per Share (0.01) 0.01 (0.02) 0.01

Avg. Shares Outstanding 35.7 Million

USA Technologies executed an agreement on February 13, 2015 with an equipment leasing company to finance its QuickStart program - a five year, non-cancellable lease program relating to its ePort hardware. Under the agreement, the leasing company may buy USA Technologies’ cashless ePort hardware and, in turn, lease the equipment directly to USA Technologies’ customers. Historically, USA Technologies has utilized its own cash resources in connection with the QuickStart Program.

“We believe that the self-serve retail industry is in the midst of a significant transition toward the cashless and mobile solutions we pioneered and have been investing in for more than a decade," said Stephen P. Herbert, USA Technologies’ chairman and chief executive officer. “If successful, our third party leasing program for the QuickStart Program would result in improved cash flows from operations and benefit the balance sheet. As our products and services increasingly gain traction, we continue to drive recurring revenue and the fundamentals of our business.”

For full year fiscal 2015, management continues to expect total revenue in the range of $51 to $53 million, for a growth rate of 20% to 26%. License and transaction fee revenue is expected to be in the range of $44 to $47 million, for a growth rate of 24% to 31%. Net new connections are expected to be in the range of 66,000 to 76,000, for a growth rate of 27% to 46%.

On April 28, USA Technologies and Chase Commerce Solutions, the global payment processing, merchant acquiring and offers business of JPMorgan Chase & Co., announced a new strategic relationship. Through a multi-year agreement, self-service retailers can benefit from USAT’s best-in-class cashless payments and M2M/IoT service with the added strength, security and expanded reach of Chase Commerce Solutions’ market-leading payment processing.

“There is an evolution happening in the way that both consumers and merchants handle money and it begins with mobile and cashless payment technology,” stated Dave DeMedio, chief financial officer of USA Technologies. “We have helped thousands of small-ticket, self-serve retail merchants to seamlessly make a transition to cashless payments, and there is still much growth opportunity in the space. This strategic relationship represents the first step with Chase Commerce Solutions toward expanding our footprint through leveraging inherent economies of scale.”

The Companies believe this strategic relationship brings greater opportunities for USAT to scale more rapidly, and to expand its product lines into new domestic and global verticals and markets, while providing Chase Commerce Solutions inroads into the self-service retail markets. USAT estimates the market size at more than $120 billion in annual transaction volumes, and 13-15 million potential "merchant locations” in the U.S.

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“We continue to enable commerce through a simple, secure payment experience for consumers and for our business clients,” said Kimberly Fitzsimmons, U.S. Market President for Chase Commerce Solutions. “We are pleased to work with USA Technologies, a market leader in this important and rapidly emerging space to accept all types of payments easily and securely.”

It was good to see USA Technologies post a nice increase in revenues for both the second quarter and six month periods. For fiscal year 2015, the Company expects to increase revenues by 20 to 26%. If the Company returns to profitability and continues to increase revenues, the stock could move much higher. We would be a buyer only if the price fell to $2 or below.

The stock can be followed daily through Internet quote services. For more information contact: USA Technologies Inc., 100 Deerfield Lane, Suite 140, Malvern, Pennsylvania 19355 or call 1-610-989-0340. The fax number is 1-610-989-0344. The Website: http://www.usatech.com.

Nautilus, Inc. NYSE Stock Symbol – NLS Price: $20.91

Nautilus operates as a consumer fitness products company in the United States, Canada, and internationally. The Company operates in two segments, Direct and Retail. It designs, develops, sources, and markets cardiovascular, and strength and nutrition fitness products, as well as related accessories for consumer use. The Company provides cardio, treadmills, ellipticals, and bike products under the Nautilus brand; fitness equipment comprising cardio and strength products, including TreadClimber and Max Trainer specialized cardio machines, Bowflex Body nutrition supplements, PowerRod and Revolution home gyms, and SelectTech dumbbells under the Bowflex brand; exercise bikes, such as Airdyne, treadmills, and ellipticals under the Schwinn brand; and various kettlebell weights and weight benches under the Universal brand.

Nautilus offers its products directly to consumers through television advertising, catalogs, and Internet; and through a network of retail companies consisting of sporting goods stores, Internet retailers, and large-format and warehouse stores, as well as specialty retailers and independent bike dealers.

We recommended Nautilus in the January 2012 issue at $1.54 and again in October 2012 at $2.57. This month Nautilus hit a 52-week high of $22.16, which is up 1,339% form our January buy and 762% from our October recommendation. The Company released excellent first quarter financials for the period ended March 31 as

shown below. Update – Do Not Buy

First Quarter 2014 2013 Net Sales $96,239,000 $71,903,000

Net Income 10,732,000 5,374,000

Net Income Per Share 0.34 0.17

Avg. Shares Outstanding 31.4 Million

Net sales for the first quarter of 2015 rose 34% compared to the same quarter of 2014. The strong growth was driven by higher sales in both the Direct and Retail segments. Gross margins for the first quarter improved by 250 basis points to 56.0%, reflecting margin increases in the Direct segment as well as a favorable mix between segments. Operating income from continuing operations for the first quarter of 2015 jumped 96% over the same quarter of 2014. The increase in operating income primarily reflects higher sales and gross margins in the Direct segment, as well as improved leverage of sales and marketing and general and administrative costs across higher sales volumes.

Bruce M. Cazenave, Chief Executive Officer, stated, “We are pleased that the strong momentum established over the last few years continues, and the first quarter results give us a solid start to continuing that positive

The Cheap Investor Newsletter – June, 2015 10

momentum throughout fiscal year 2015. The Bowflex Max Trainer® product line continues to perform well and helped drive strong sales growth of 46% for our Direct segment, as well as significant improvements in gross margin and operating income. Our Retail segment sales increase of 6% underscores our ability to continue to meet the evolving demands of our retail partners with new products, including our recently launched treadmill line.”

Mr. Cazenave continued, “Our improved financial performance and market success over the past few years has been driven by continued focus on product innovation, margin discipline, and realizing operating leverage. I am proud of how our team is achieving a healthy balance between advancing long-term initiatives, such as diversifying our revenue stream and building further operational capabilities, combined with strong execution of near-term priorities, such as planned launches of new products staged in the pipeline for later this year.”

Nautilus has been a very profitable investment for our subscribers. If the Company continues to grow its revenues and earnings the price should continue to move up. Because the price has moved up so much, shareholders should consider taking some of their profits off the table.

The stock can be followed daily through some major newspapers and Internet quote services. For more information contact: Nautilus Inc., 17750 SE 6th Way, Vancouver, Washington 98683 or call 1-360-859-2900. The Website: http://www.nautilusinc.com.

Maxwell Technology, Inc. NASDAQ Stock Symbol – MXWL Price: $5.81

Maxwell is a global leader in the development and manufacture of innovative, cost-effective energy storage and power delivery solutions. The Company’s ultracapacitor products provide safe and reliable power solutions for applications in consumer and industrial electronics, transportation, renewable energy and information technology. Its CONDIS® high-voltage grading and coupling capacitors help to ensure the safety and reliability of electric utility infrastructure and other applications involving transport, distribution and measurement of high-voltage electrical energy. Maxwell’s radiation-hardened microelectronic products for satellites and spacecraft include single board computers and components incorporating its proprietary RADPAK® packaging and shielding technology that enables them to perform reliably in space.

Recommended in the December 2012 issue at $6.47, Maxwell Technology soared 185% to a high of $18.43 in June 2014. Now that the stock has fallen below our original recommendation, several subscribers have called asking if it’s time to buy. We always review a company’s fundamentals before purchasing shares, and what we found has us hesitating to buy even though the price is low. The biggest problem is the first quarter financials

have fallen. The results for the period ended March 31 are shown below. Update – Do Not Buy

First Quarter 2015 2014 Revenue $34,670,000 $46,001,000

Net Income (Loss) (9,341,000) 319,000

Net Income (Loss) Per Share (0.32) 0.01

Avg. Shares Outstanding 29.4 Million

First quarter ultracapacitor revenue was down 31% compared with the $32.0 million recorded in the first quarter of 2014. Sales of high voltage capacitor and microelectronics products totaled $12.7 million in first quarter 2015, down 9% from the $14.0 million recorded in first quarter 2014.

“First quarter revenue and gross margin were in line with our guidance,” said Dr. Franz Fink, Maxwell's President and CEO. “While operating expenses were higher than anticipated, we are making progress in the second quarter towards our quarterly target of $15 million on a non-GAAP basis. We expect to have fully

The Cheap Investor Newsletter – June, 2015 11

executed our expense reduction plan during the third quarter, so the full impact of those reductions will be seen in the fourth quarter of 2015.”

“We expect 5 to 10% sequential top line growth in the second quarter, and that sales momentum, driven by projected seasonally increasing volume in the China bus market, will build in the second half of the year, enabling us to achieve total revenue in a range of $160 million to $180 million for the year,” added Dr. Fink.

When we recommended Maxwell Technologies in the December 2012 issue, the stock had fallen from $21.24 in February 2012 to our recommended price of $6.47. At that time the Company had good nine-month revenues of 124 million, up from $115 million the previous year. Net income was $0.30 per share, up from a loss of ($0.03) a share a year earlier. Maxwell continued to grow its revenues and earnings and eventually hit its high of $18.43 in June 2014. Falling revenues and losses versus profits have hit the Company hard. Currently, we do not see signs of a turnaround. Thus we would not purchase shares at this time.

The stock can be followed daily through Internet quote services. For more information contact: Maxwell Technologies, Inc., 3888 Calle Fortunada, San Diego, California 92123 or call 1-858-503-3300. The fax number is 858-503-3301. The Website: http://www.maxwell.com.

Coronado Biosciences Changes its Name to Fortress Biotech, Inc NASDAQ Stock Symbol – FBIO Price: $3.05

Fortress Biotech (formerly Coronado Biosciences) acquires, develops and commercializes novel pharmaceutical and biotechnology products. Fortress plans to develop and commercialize products that it acquires both directly as well as indirectly by establishing subsidiary companies, also known as Fortress Companies. The Company will leverage its biopharmaceutical business expertise and drug development capabilities to help the Fortress Companies achieve their goals. Additionally, the Company will provide funding and management services to each of the Fortress Companies, and from time to time, the Company and the Fortress Companies will seek licensing, partnerships, joint ventures, and/or public and private financings to accelerate and provide additional funding to support their research and development programs

The CHEAP Investor recommended Coronado Biosciences in the May, 2014 issue at $1.81. This past month,

the stock hit a 52-week high of $5.35 or +196%! Update – Buy at Lower Price

As of April 28, the Company changed its name to Fortress Biotech, Inc. The Company's new NASDAQ stock symbol is FBIO. In conjunction with its corporate name change, it has redesigned its website, which is available at www.fortressbiotech.com.

Dr. Lindsay A. Rosenwald, Chairman and CEO of Fortress Biotech, formerly Coronado Biosciences, stated, “We are very excited to re-brand the Company Fortress Biotech, which we believe better reflects our new business plan which we began executing over the last year and we believe represents the future of the Company. Over this past year, we launched six new companies with nine products and product candidates under development ranging from pre-clinical to phase 3-ready. We look forward to continuing to execute our vision to develop a diversified biopharmaceutical company with multiple products and multiple revenue streams.”

We like the stock for the longer term primarily because it has several drug candidates in FDA trials, and the Company has a large amount of cash. The stock is volatile, and it currently is in a downward trend. We would purchase shares if it fell to $2.00 or below.

The stock can be followed daily through Internet quote services. For more information contact: Fortress Biosciences, Inc., 24 New England Executive Park, Suite 105, Burlington, Massachusetts 01803 or call 1-781-652-4500. The fax number is 1-781-652-4545. The Website: http://www.fortressbiotech.com.

The Cheap Investor Newsletter – June, 2015 12

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