INVESTMENT RESEARCH PHILOSOPHY

SmallCaps Online LLC is a registered investment advisor focused primarily on identifying emerging growth companies in the healthcare and information technology sectors that offer compelling investment opportunities over the long term. We seek the "undiscovered gems" or "fallen angels" in the small-cap segment of the market, that do not have credible, fundamental investment research support, or have been orphaned by the institutionally oriented sellside and buyside investment community. We make our investment research available, for free, to online investors via our small-cap research portal, at www.SmallCapsOnline.com, as well as through traditional distribution channels to the institutional buyside, sellside and brokerage communities.

Since the 1920s, small-cap companies have outperformed all investment segments of the market in every decade except the 1990s. One result of a growing trend to investment in equities, in combination with the current prolonged bull market, has been a trend to invest in large-cap companies. Institutional investors, who have seen their portfolio assets grow significantly over the last few years, do not have the resources to evaluate, monitor, manage and trade in small-cap issues. Investment banks and brokerage firms, which have been consolidating over the last few years, need to focus on larger transactions (and, hence, larger companies) to generate the fees necessary to support their bigger infrastructures. As a result, small-cap companies have been sold off, almost indiscriminately, across all industry segment groups.

We believe this creates a significant opportunity for the individual investor, particularly the sophisticated online investor who is increasingly leveraging the Internet to research investment ideas, and investing directly in a cost-effective manner. And this is happening, with increasing frequency, as reported in a recent article in The New York Times (citing data from NFO Interactive):

• Over 20 million households currently use the Internet to research investment ideas;
• over 6.3 million households have online trading accounts (obviously, a much larger number use the Internet for research, then call their brokers for trade execution);
• and, interestingly, online investors tend to have a larger portion of their portfolio in individual stocks versus mutual funds, reflecting the trend towards "doing their homework" on the Internet, and moving monies out of mutual funds and into individual stocks.

SmallCapsOnline.com is an online, small cap research portal. At our site, online investors can access our proprietary research products and financial models, access the online SEC government filings for companies (Form 10-Ks, 10-Qs, etc.), view trading fundamentals and graphs, and visit the company’s website — all from within our destination site, and all with a click of a button. Also, online investors can access their online trading accounts, or market commentary, directly from our site. And every day, we feature "Today’s Hot Hot News" with comments on recent events and announcements concerning companies on our Recommended List, and other news of interest for those interested in small-cap companies.