ValueRich Magazine Winter 2005 | Jim Cramer

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ise Capital • Merge & Acquire • Partner &Joint Venture • Develop New Business

March 9-12, 2005, Palm Beach, Florida USA

The World's Largest Public Company Finance and Business Development Gathering For the first time ever, 250 small-cap public companies will present their businesses and market their strategies at an international public company exposition for three days.

Why an Expo?

Join thousands of: • Public Company Officers •Analysts • Money Managers • Fund Managers • Investment Bankers • Institutional Investors

• Brokers • Venture Capitalists •Attorneys • Accountants • Wealthy Investors

Today, successful small-cap and micro-cap companies are combining public company financial functions with traditional business development to create growth. This is the first small-cap financial conference to combine both traditional financial presentations and a business development expo in one event. This revolutionary new concept includes:

Businesses Buildin Business ValueRich invites your corporate executive team to develop new business relationships, secure investment and gain market exposure in a new financial conference format that provides free access to every attendee for three full days.

Presenting companies will be provided a sophisticated 1O'xl 0' maple hard-wall paneled executive suite. Bring your publications, DVD presentations, laptops and show cards. Leave that bulky and expensive-to-ship trade show display behind.

On the final day, join ValueRich for a day of golf and a 19th-hole reception at the PGA National Champions course.

• Nonstop access to every attendee in the 100,000-squarefoot Main Hall of the Palm Beach County Convention Center • Financial villages, where companies will be located based on their primary investment and development goals • A "city center" with a skyline made of buildings designed to bring attendees together throughout the event • Breakout rooms with the latest audiovisual technology for formal investor presentations • An Internet cafe with a menu of international coffees and delicious pastries • Private boardrooms for discreet meetings

Check www.valuerichonline.com for up-to-date additions to the program schedule, to send an e-mail registration request and to research participating hotels. Call 1-561-832-8878 for more information.

Unlimited Marketing Options The ValueRich Expo offers unlimited marketing and presentation options, including traditional public company presentations to the most sought-after investment-related audience in the world. Investor presentation options include: • 20-minute financial formal presentation to a targeted audience or the general assembly • One-on-one meetings with attending analysts, fund managers, investment bankers and other public company officers, arranged by ValueRich • Opportunities to host receptions, cocktail parties or off-site events for a select guest list of Expo attendees

rhe Breakers, in Palm Beach is a ValueRich Expo participating hotel. vent Sponsors:

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<0 2005 Hyatt Corp.

Contents

LUERICH

THIN K SMALL-CAP, LI VE LARGE

WINTER2005

Cover Story

fZ!J An Interview With Jim Cramer The ever-ebullient Jim Cramer made his reputation with uncanny trading and fund management skills, and then became a household name as co-host of Kudlow & Cramer on CNBC. Now he has a new nightly show of his own . We talked with Cramer about the new show, where the next hot stocks will be found and the challenges facing small-cap public companies.

i.Want.l From a great winter resort deal to a great physique in four minutes a day, here is a new installment of unique products that you'll find hard to pass up.

â&#x20AC;˘ Salvador Dali: His Surreal Legacy is Yielding Fantastic Investments Salvador Dali was indisputably one of the great artists of the twentieth century. The recent offering of the Clot Collection of Dali sculptures, recognized and authenticated as the only sculptures that Dali actually did with his own hands, is big news.

n.Motion

fl

Flying Dutchman: Spyker C8

By Will Andrews

If you were going to look for the most outrageous, head-turning ride possible, where would you look: Italy, Germany, the USA, Japan, Sweden? Would you believe Holland? Spyker's stunning C8 racing inspired super cars could easily be the most unusual in the world.

I

Lobstering Italian Style: Mochi Craft 51' Dolphin

By Bill "Gup py" McGuffy

What do you get when you cross a New England lobster boat with a fine Italian yacht? You get the Mochi Craft Dolphin. It's beautiful to behold, fast, seaworthy and loaded with creature comforts- and it just hit American shores.

ValueRich Small-cap Financial Expo fi The Runner

By David Willson

An avid jogger who's run all over the world knows there's no place like his Palm Beach home for the best things in life and doing business.

IJ The Great Attractor

By David Willson

The Palm Beach County Convention Center breaks new ground in meetings technology.

IJ

Business and Finance Together in One Large Event

The first large-scale small-cap business development exposition and financial conference is about to take place. It could change the way small-cap companies do business forever.

The Value R~clh MarketPlace Winter 2005 Directory

pg 55

Public companies advertise their investment banking and financial needs in this revolutionary new directory for the financial industry.

8 I Value Rich Magazine 'i ttr 2005

View public companies: Seeking Capital

pg 57

Seeking to Merge & Acquire

pg 61

Seeking Partnerships

pg65

Seeking New Business Contacts

pg 67

Seeking Market Support

pg69 www. valuerichonline .com

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Contents w.Street

I

Maxim-izing Returns

By Liza Grant Smith

Bigger isn't necessarily better. Maxim Group, a midsize investment firm whose business strategy of delivering big-firm capabilities, without the bureaucracy, to small- and mid-cap companies has produced extraordinary results.

~ The 2005 Markets: A Big Picture View

By Charles V. Payne

A generally upbeat market year could be spoiled by a brewing economic Cold War with the European Union.

B Liza Grant Sm ith

路 Royale Energy: Drilling for Success With declining U.S. supply of oil and natural gas, the market is ripe for domestic exploration and production. Royale Energy uses advanced technology to position itself for success.

~

Hear USA: The Market's Hearing Loss

The nation's third-largest provider of audiological products and services has been a driver in reshaping the hearing care industry. Yet the market remains deaf to its value.

~ Verilink: Beating the Broadband Blues When the tech bubble burst, Verilink took a divergent path from its industry counterparts, and today has emerged stronger and better equipped.

n.Vestment

I

Got Stock? Got Protection for that Stock?

By Ajene Watson

Non-recourse stock loans are some of the best hedging tools in the marketplace today, yet few know about them or completely understand their benefits.

n.Business

m!J Building Value, Building Quality of Life The Robert Mayer Corporation has created its own boom real estate market by focusing on overlooked opportunities, where others have failed to see the potential.

~ The New Face of Philanthropy

By Liza Grant Sm ith

Companies with strong philanthropic programs not only improve our world, but they gain higher employee moral, better leadership development, greater market share and more.

~~ International Economic Cooperation

By Ronald D. Hunter

The U.S. government's priorities are sadly missplaced on the international front.

x.Peditions

Iii Your Private Island Villa is Waiting Imagine a private villa, complete with a staff to serve your every need and nestled on tropical Barbados island in the Caribbean. We visit Bon Vivant Villa.

n.Spiration

II A Big Shoe to Fill

By Karen Willson

10 \ ValueRich Magazine Winter 2005

When three-time Pulitzer Prize winner and Shoe comic strip creator Jeff MacNelly died of cancer, America lost its mightiest pen . But wife Susie MacNelly and remaining collaborators continue his legacy. www. va I uerichonl i ne .com

Fonseca "The Original" Our first and most clrusic cigar! We have been making this cigar since 1992 with twice aged Connecticut Shade wrapper grown in Connecticut USA. This wrapper is chosen for its beautiful, golden brown color and mild, rich smoke. We then add an aged, Mexican Sumatra binder for a little spice and smokey flavor.

A lso available in Mad ura!

Fonseca

Fonseca

Serie F

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A ll tobacco in this cigar is aged a minimum of 5 years! We start with a beautiful Ecuador, Connecticut Seed, Shade Grown wrapper. The Tercio Aged Dominican filler and binder provide a rich, creamy flavor that give the cigar presence without being overpowering. A medium bodied smoke supported by a floral aroma of natural tobacco.

The "F is or fuerte ..

Spanish for full flavor.

This blend startS with a well aged dark brown, oily Connecticut wrapper to attract the cigar connoisseur. The filler is Tercio Aged Ligero Cuban Seed. The smoke is robtLSt yet smooth and very, very tasty. This blend is designed to be savored slowly when you're in the mood for a full bodied, strong cigar.

Six different cigars. Six different flavors.

Six different personalities. One proud name.

Ve~as

de Fonseca This cigar is bold and daring! We use a Cameroon wrapper for its unique taste and pair it with a sweet tasting Connecticut Broadleaf binder. The filler is bold with Nicaraguan Ligero and Dominican Tercio Aged tobaccos. This cigar starts off mellow and builds in flavor as the Nicaraguan Ligero heats up. The smoke is a medium bodied, rich flavor.

Fonseca Sun Grown Cedllr As the name implies, this cigar has a Sun Grown. wrapper that is matched with a Dominican Olor binder. ln. the filler we really go wild by combining Nicaraguan Ligero for strength, Pemvian tobacco for its floral character and Dominican Cuban. Seed to round out the blend. The result is a medium to full bodied cigar with loads of flavor and taste!

Limited Edition Fonseca Reserva Especilll Z003 This full bodied cigar is wrapped in. the fin.est Havana Criollo Honduran. leaf and filled with 1996 Dominican and Nicaraguan Ligero. 1t comes packaged in. an. exquisite, mahogany chest, brass fJlate numbered with the box personalty signed by Master Blender Manuel Quesada.

Get yours before they are gone!

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Romantic, Intimate, Extraordina Experience Life as It Is Meant to Be

12 1Value Rich Magazine Winter 2005

If your New Year's resolution was to increase tranquility and romance in your life, a stay at an exclusive and remote lodge may just be the solution. Imagine two vacation resorts so woodsy, remote and breathtakingly luxurious, you'll be happy to leave the laptop in the closet and toss the cell phone out the window.

Sister Relais & Chateaux resorts, Lake Placid Lodge and The Point, are nestled in the heart of the Adirondack Mountains. The Lake Placid Lodge features rustic decor, stone fireplaces and deep soaking tubs in each of its 34 rooms and cabins. Its highly acclaimed restaurant serves exceptional New American cuisine using local organic fa rmhouse products.

The Point occupies a nearby 10-acre wooded peninsula on Upper Saranac Lake.

Built in 1933 by William Avery Rockefeller, The Point evokes the turn-of-the-century grandeur of the Adirondack Great Camps era.

Each guest room has its own individual character and appeal.

From now to May 2005, stay at the Lake Placid Lodge or The Point for 3 nights and receive 2 complimentary one-hour massages.

Lake Placid Lodge: from $400, includes breakfast and afternoon tea The Point: from $1,250 all-inclusive; includes three meals, afternoon tea, all beverages, etc.

Offer is space available and rates do not include service or ta x. www.thepointresort.com www.Jakeplacidlodge.com

www.valuerichonline.com

i.Want.l

Ultimate Conditioning in Just Four Minutes a Day It has been called the "king" of cardio machines and the most revolutionary piece of equipment in the fitness industry. The Range of Motion machine delivers the most time-efficient workout possible - a complete cardiovascular, strength and flexibility workout in just four minutes.

Studies comparing the benefits of a few minutes of high-intensity interval training versus 30 to 60 minutes of moderate exercise on a treadmill have found t hat high-intensity ~ . train ing burned more fat and raised muscle .,metabolism to a higher level. 路 The ROM was designed to work all of the major muscle groups in the upper and lower body through 80 percent of their range of motion four minutes.

The four-m inute workout is definitely intense, but the ROM can be used by anyone, from older people with little muscle development to professional athletes.

And at only four minutes a workout, just about anyone can make the time to get a complete workout on a regular basis.

www. vrexpo .net

This unique and life-changing piece of equipment may be the most expensive exercise device on the market, but it is worth every penny- especially if you break it down to a dollar-per-use to obtain the optimum physical results. The sleek, finely crafted ROM fits in any home gym or office.

Price: $14,61 5 www.fastexercise.com

Winter 2005 ValueRich Magazine

In

V.I.P. Access to the Cream of the Investment Community Imagine three days of uninterrupted access to small-cap public company officers, research analysts, fund managers, money managers, institutiona\ investors, investment bankers, investor relations professionals, asset managers, brokers, venture capitalists, the financial press, and wealthy investors.

Now imagine that they are there for one main reason -to meet you.

The ValueRich Small-cap Financial Expo is unique in all of the investment world. It is the first to provide a tailor-made environment for public companies to develop business as well as seek investor capital and market exposure. It is the largest event of its type ever held - so large that it will fill the beautiful new Palm Beach County Convention Center.

CEOs of approximately 250 public companies will make financial presentations. Industry leaders will speak and present panel discussions. And everyone will come together in a high energy business development event on the convention floor. On the final day, attendees will have the opportunity to play a round of golf on

two PGA Champion courses and enjoy each other's company at the 19th-hole party.

Industry stalwarts such as Business Wire, the leading source for breaking business news releases and multimedia; EDGAR Online, the leading provider of public company financial information and BigDough, the largest buy-side and capital markets database service in North America are sponsors and marketing partners in the ValueRich conference.

Other sponsors and early registrants include outstanding investment banking firms Maxim Group (story on pg 48), Cornell Capital Partners, Paulson Investment Company and Laurus Funds.

Investor relations firms currently include Cameron Associates and Hayden Communications.

The American Stock Exchange will be in attendance. And asset managers with billions to invest will be flying in from major European financial centers such as London, Milan, Oslo and Stockholm.

Executive suites on the floor of the expo are filling up at $7,000.

Daily attendance is available at $150 per day, and a slot in the golf tournament and 19th hole party is available at $400. For information call 561-832-8878.

www.vrexpo.net

The TidaiForce iO Cruiser is comfortable, easy to operate, and incredibly fun to ride - because you only pedal when you want to! You can get the exercise if you want, or you can use the bike's futuristic in-wheel electric motor system and add enough power to level hills and cover long distances.

The retro-styled cruiser is powered by a 750-watt WaveCrest Adaptive Motor'" system in its rear wheel hub and a rechargeable battery unit in the front wheel hub. The motor delivers about 1.0 horsepower reliably and efficiently while also functioning as a generator converting inertia into electrical energy to recharge the battery and extend the bike's range. 路 Before TidaiForce introduced consumer 路 models, they sold their h!gh performance electric bikes to police and security forces as well as to the U.S. _military for use in theater operations.

The _ iO Cruiser has a maximum speed of 20 MPH and gets 20 miles to a charge with no noise and 路no emissions. Available through dealers for approximately $2,000.

www.tidalforce .com

14 1ValueRich Magazine Winter 2005

www.va Iuerichonlin e .com

by Joseph Sid01路owicz

His Surreal Legacy Is Yielding Fantastic Investments While some of Dali International's cl ients huge investment returns. Art auctions all over the world are buying from the Clot Collection strictly as art connoisseurs with no intention of continue to post record selling, many clients are buying based on results. While investing in the tremendous investment potential. Those contemporary art might be buying today have a te rrific advantage somewhat tricky, certainly due to the fact that this collection was anything from one of the released only recently for public acquisition. world 's great mast ers, such This means that pieces have not yet had a as Salvador Dali, is a sure chance to be sold repeatedly, either privately bet. or publicly. Each time a piece is sold, it Last year, more than 400 usually increases in value substantially. The pieces of Dali's art were sold Philadelphia Museum of Art is showing a Dal i atone Paris auction for a total Exhibit from February 16, 2005 to May 15, of $9.2 million, far exceed2005. The entire city is getting behind the ing the collection's estimatevent calling it "The Dali Experience:' Several ed value of $5.7 million. A dozen or so works sold for $230,000 Gala Grad iva- available for acquisition

Nude Ascending a rcase - Homage to -available for acquisition

This year marks the 1OOth anniversary of the birth of Salvador Dali. While he was certainly a charismatic figure in the art world during his life, he is emerging t oday as one of the most influential artists of the 20th century. The resurgence of interest in his works and the resultant diminishing supply are sending prices much higher. For those interested in reaping the benefits, now is an excellent time to acquire a piece of art.

If you have never invested in art before, perhaps it is time to begin. Art sales are booming and savvy collectors are enjoying 16 1ValueRich Magaz in e Winter 2005

to $460,000 each, and more than 200 sketches sold for $2,300 to $57,000 each.

The price range of Dali's work allows for anyone, from the modest collector to the most serious investor, to participate in acquiring a piece.

A Rare Dali Collection The Clot Collection of Salvador Dali sculptures, recognized and authenticated as the only sculptures that Dali actually did with his own hands, is currently being offered through an exclusive arrangement by Dali International Gal leries. These sculptures were locked up for many years and have only recently been released for worldwide acquisition. www. valuerichonline.com

clients to lock in any increase in value of a piece they own and then apply that profit to an upgrade acquisition of a larger or more valuable piece. Almost all of Dali International's clients take advantage of this option. Dali International also offers an extensive lease program with a buy option for larger pieces.

Corporate Connoisseurs An increasing number of companies today are investing more heavily in art for a number of reasons. Aside from the obvious upside investment potential, when a client enters a boardroom decorated with appropriate artwork, it puts a whole new face on the company. Just a few beautiful pieces of original art by prominent artists will provide a company with a whole new aura of sophistication. Clients immediately assume that management is refined, soph isticated and well-educated : exactly the image most CEOs and company presidents want to convey.

There are substantia l well-documented studies to support this observation . Build Your Business by Collecting Art, in the March issue of Profitguide.com, by Lynn Fraser references a number of these Carmen - Castanets 1970 -available for acquisition studies.

Dr. Chin-tao Wu, a specialist in contemporary art and culture at University College in London, interviewed over 400 British and American corporations about their firms' art collections. While unable to quantify art's bottomline benefits, she concluded that artwork displayed in company foyers and halls acts as an effective means of differentiating a firm from its competitors and enables companies to project an image of being progressive and innovative, which contributes to the company's competitive advantage.

Dali International Galleries has a larg e number of international corporate clients, and this segment of their business is really booming.

One of Dali International's

hotels are offering special deals with VIP tickets. There will be a 100-foot banner on Madison Square Garden with Dali's face and a 70-foot banner at Philadelphia's 30th Street station. The advertising budget of $2.6 million will be spent promoting the event in Boston, New York, Philadelphia, and Harrisburg. It is believed that "The Dali Experience" will draw millions of visitors.

This exposure and celebration of Dali will surely drive the interest and value of his art significantly higher.

Dali Internat ional advises its clients through the acquisition process of building a portfolio of Dali sculptures that will meet or exceed client objectives on an investment basis.

Dali International Galleries is the exclusive dealer for the Clot Collection, owned and licensed by a group in Spain. This allows Dali International to offer direct purchasing for its clients. Purchasing one of these sculptures at an auction would almost certainly mean paying a higher price and probably a buyer's premium as well.

Dali International Galleries also offers an innovative upgrade program that allows

www.vrexpo .net

Salvador Dali

clients, Miami- and New York-based investment banker Jeff Forster, loved the collection so much he purchased three pieces. Once he put the pieces on display, the response was overwhelming. "Everyone who has seen my sculptures has just loved them and I received so many inquiries from friends and associates that I just had to get involved with the collection:' Mr. Forster has recently entered into an agreement with Dali International to become the exclusive Miami Associate Dealer.

Dali International Gall eries is cu rrently

accepting acquisition enquiries. While supplies last, Dali International is offering a free limited edition Salvador Dali book on the Clot Collection to readers who contact the company and mention ValueRich . R Information: Kent A. Deuters 1-800-290-4895 kent@daliintl.com www.daliintl.com

W1nter 2005 ValueRich Magazine 17

Christ of Saint John of the Cross- 1974 -available for acquisition

Lombardi Financial Profit Confidential Oct. 21, 2003 "In 1987 I bought an etching by Salvador Dali called 'Sancho Panza'. I paid $1,400 for the piece. This was two years before Dali died. There were 300 in the edition. Today I would not sell this piece for less than $20,000. In fact it is next to impossible to find signed etchings as the art world has eaten them up. My $1,400 grew to $20,000 in fifteen years. My gain on investment was 1,328 percent. Had I bought the entire collection it would equate to $6,000,000 today:' Winged Triton- available for acquisition {PBUK)

Surreal Facts: • Salvador Dali is number 20 on the list of most-sought-after artists worldwide, ahead of Gauguin, Rockwell, Gainsborough, Toulouse-Lautrec and Van Gogh.

• Since late 2002, prices for Dali's art are up 177 percent.

• Last year, over $15 million worth of Dali art was sold at auctions.

• Rare art has consistently outperformed the S&P 500, NASDAQ and all other major markets for well over 50 years.

• Art is unmatched as a crisis hedge, has universal value and is convertible anywhere in the world.

• The price for rare art is ruled by supply and demand, driven by virtually millions of worldwide collectors and free of any governmental interference.

18 ValueRich Magazine Wi ter 2005

www. valuerichonline .com

FOR THE FINEST HOMES IN THE WORLD~~~ One of a kind floriform chandelier in hand blown art glass. Each anemone shade is a singular artistic accomp lishment. Dozens of them mount

on a steel matrix to create a dynamic and thoroughly functional chandelier. One of I00 chandeliers to be sold in art glass , crysta l, dare bronze and alabaster

41 " drop x 48" diameter

Grand scale Italian fountain .

Two tiers of mythological spouting dolphin rise from the center of a pool supporting scalloped bowls. Complete with lights, pump and coping. One of ISO fountains to be sold in stone, marble and bronze.

12'h x 25' diameter

Monumental Mansard fireplace mantel in

Circassian walnut with cut stone caryatids surmounted on the legs and a prominent

raised panel hood.The elaborately carved and stylized salamander on the frieze indicates that its original home w as that

of a noble.The salamander was typically carved, embossed or otherwise decorated in various places in Grand Chateaux to

indicate that King Francois I had stayed there. \twas a tremendo us honor then

and re mains so today. One of 75 antique fireplace mantels in wood , stone and

marble to be sold.

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Auction March 5 & 6 For a FREE catalog, contact: Red Baron Dept.VR, 6450 Roswell Rd., Atlanta, Ga. 30328 (404)252-3770 Fax (404)257-0268 www.redbaronsantiques.com

"I think we're 1n an era now where the expectations are reduced and the real bargains are in the smaller-caps, but people have to do their homework:' A VALUERICH Interview With

Jim Cramer Jim Cramer is one of the best-known media personalities covering Wall Street.

Millions of viewers are familiar with Kudlow & Cramer, his CNBC prime-time business/news show. A large number of investors are also familiar with Cramer's trading acumen, and follow his advice diligently on his Rea/Money radio program and on TheStreet. com, the investment Web site Cramer founded with friend and New Republic owner Marty Peretz in 1996.

Cramer has exhibited a penchant for the small-cap side of the markets. So in December 2004, ValueRich approached him to be the keynote speaker at the ValueRich Small-cap Financial Expo in Palm Beach, Florida, March 9-12, 2005. He loved the idea and said that he wanted to meet every small-cap company CEO at the convention . Unfortunately, just as final arrangements were being completed, CNBC offered him a new live daily show and he had to drop all previous engagements to accommodate its rigorous schedule.

Good for Jim, bad for us. This new development, however, didn't stop us from interviewing him for ValueRich magazine.

INTERVIEW VALUERICH: Four or five years ago, small-cap st ocks were the talk at every dinner table; now 95 percent of the stocks that trade are not discussed. With all of these national television shows devoted to the markets, there are still only a few stocks that are being talked about. What is your impression of all of this?

CRAMER: I think that a lot of people have given up on the stock market. They feel that the stock market turned out to be rigged against them . A lot of the research was corrupt and could be bought. A lot of the mutual funds were doing wrong things. And it soured a tremendous number of people to the market. I can't blame anyone for that. But the market is not rigged.

Given that they don't want to be involved, what happens is that they have fallen into the S&P 500 or index funds -those who are still willing to be in the market.

Or they focus on just a couple of stocks that trade with a lot of liquidity. But they don't seem to recognize that those stocks, the lntels and the Ciscos, are completely exploited.

There is not a lot there for them . www.valuerichonline .com

Cover Story What they should be looking for is situations that are off the beaten track, where at least there's a chance to find the next Intel, as opposed to the current Intel, which is what they all seem to be interested in.

VALUERICH : How does an individual find a stock that's off the beaten track?

And do you think that ValueRich can have a hand in addressing some of these issues and bringing attention to some of these opportunities?

CRAMER: I think that whoever does it is going to have to have very high standards.

You have to be fully disclosed . ... I think that the media have a role to play, but the media have to be independent. You can't take any money from the companies. You can't invest in the companies. You can't get into the conflicted situation where the public would feel like you're the banker. That's the big issue.

Or, alternatively, you become the banker and you disclose that you are the banker.

That's fine too. But what really matters is that you can't possibly go down the conflict path that Wall Street did earlier, because then you get tainted. And you don't want to be tainted .

V LUERICH : The big investment banks are turning their noses up at the small public company CEO these days. They tell them to come back when their market cap is higher.

It's hard for them to get any analysis done, any research published . So, what can a small public company CEO do?

CRAMER:The small-company CEO has to find someone who is willing to be the publicist for them . I think you guys (ValueRich) can play that role. But the CEO has to try to tell their story to whatever venues allow the story to be told. And there are not going to be as many venues as there used to be.

There are also not as many people who are interested. But you have to try.

V LUERICH: Other than finding publishing routes, what other measures can a smallcap public company CEO take to improve share value? It seems like an awful lot of these smaller companies' share values are lower than they should be.

CRAMER: I don't know. A lot of times I think that's true, but it's just what the investment process will have to be about for a while. We're in a period right now where people are beginning to realize that www. vrexpo .net

the smaller-capital situations yield the best returns, but you can't rush it.

The managements can take out ads. The managements can go to whatever conferences are available- and I think it's a great idea for management to do that. But for the most part, what a management needs to do is grow the business. And if the stock doesn't move in the interim, there is not really much that they can do about it.

We tried very hard for a while to get juiced about little-cap stocks, and a lot of people lost money. I think we're in an era now where the expectations are reduced and the real bargains are in the smaller-caps, but people have to do their homework.

"The small-cap company has to have a Web site, has to have investor relations, has to go to conferences where people can see it .. :' So the small-cap company has to have a Web site, has to have investor relations, has to go to conferences where people can see it, and has to put all that stuff on the Web. But beyond all that, there are not really a lot of forums right now. I just don't see a lot of forums for them to be able to get their story out.

VALUE RICH : What is the format of your new show going to be, and are small-caps going to have a part of that?

CRAMER: My show is going to be very similar to my radio show. I will be exploring everything -small-cap, large-cap and midcap. I am looking for great ideas.

I'm using the same

litmus test that I have used for everything else in my career. That is, if I can help people make money I'm doing a good job, and if I lose people's money I'm doing a bad job. It really doesn't matter what the capitalization is. What matters is that I do it right.

VALUERICH : And are you doing it from a totally independent position?

CRAMER: Yeah, I'm totally independent.

As in all the other venues I'm on, I don't take money from anyone. I just tell the story.

VALUERICH: You originally surfaced as a public figure from TheStreet.com . Could you give us the 'Reader's Digest' version of how you went from founding CEO of a company that you took public to emerging TV personality?

CRAMER: A lot of this goes back to a time when I was working for Dow Jones while I was running my hedge fund and I was fascinated by the Web. At that time I was working on SmartMoney. And I went to them and said, "Look, we ought to do a daily Web version :' At that time none of their publications were on the Web; this was in 1995-96.

All I asked for was a percentage of the equity, because I knew that I would design it and work very hard at it. And they said no.

So I said: "You know what? This is the Web. It's cheap. I can go do it myself:' So in my spare time, when I wasn't working on the hedge fund, I started TheStreet.com with my friend Marty Peretz to try to explain to people the way the market really works. People didn't understand at that point a lot of the stuff that subsequently came out: that there are a lot of conflicts, a lot of pitfalls and a lot of things people don't recognize about companies.

We also happened to be coming out at the same time that online training started, so it was a natural companion. And I think it remains a natural companion for anyone who is trying to buy or sell stocks on the Web. Winter 2005 Value Rich Magazine 121

At the same time that I was doing that, I was asked to be on Good Morning America.

Every time I was on Good Morning America, it would drive people to our Web site, and it was great business. Then I was also asked to be on CNBC as a guest host on Squawk Box. That worked out and I became a regular.

I got my own show on CNBC after 9/ 11, w hen I was very emphatic on air that the world had changed. Some network execs saw me and wanted to give me a show. But I d on't regard Kudlow & Cramer as a show that is really trying to help people make money. I regard this new show as something that will definitely try and help people make money.

V LUERICH : What's going to happen with Kudlow & Cramer?

CRAMER: I intend to continue contributing to it. But I have not been made privy to what the network's plans are.

LUERICH : Congratulations.

CRAMER: Thank you . I know people really truly want help. They want directional help. They don't just want news. They want analysis, and they want to try to make money again. After a five-year period where people basically said "I don't think money can be made in the market;' they are coming back. They're saying: "I see some money being made, but it's not being made in Sun Micro. Help me find places where it's being made. Help me make sense of things:' And that's what I want to do.

L ERICH : Is it a fair assessment to say that CNBC has been focusing on the blue chips and ignoring the small-caps?

CRAMER: It's not monolithic.

I have brought small-caps on my show and I believe the results have been acceptable to management.

Focus tends to be on what's most widely traded. And I think that makes sense.

It's just that what's most widely traded isn't really working right now.Therearetimes when what's widely traded is working, and that's a nice 22 1ValueRich Magazine Winter 2005

focus. But for the last year, that hasn't really worked. I think that what you want to do is try to have a dual focus, to talk about what's most actively traded but also try to find new ideas. That's the way of the future.

U RICH : I know you're very much th inking about the investor side, but do you have a checklist that you would give a smallcap or micro-cap company CEO to try to present a healthy company from the point of view of the investor?

CRAMER: We're talking now about undiscovered undervalued companies. They need to be able to say a couple of things very clearly in order to get the investor's attention: 1. How big the market is that they address.

2. Why they have something proprietary that could dominate that market.

3. How they are going to beat the competition.

A lot of times people say: "Look, I've got the magic bullet. I'm in nanotechnology. I've got this great science:' And then it turns out that ten other guys have it. I think it's really vital for these companies to be able to distinguish themselves and be heard above the rabble. But unless they have something propri-

etary, they will not be heard. And maybe that's right. If they have nothing proprietary, they're not going to be that special.

VALUERICH: Va/ueRich magazine has a MarketPlace section where under-followed public companies can list financial and investment banking needs. We are out to create a platform for these small companies.

We have companies coming to us every single day that want their story to be published in some form of editorial. As an independent commentator yourself, what would you suggest as a relatively usable litmus test that we as editors, writers and researchers should apply to covering these micro-cap companies.

CRAMER: I want to distinguish between companies that need cash and the companies that need ink. If they need cash, then there is a very well-organized investment banking system in our country that allows lots of companies that should get cash to be funded -and even a lot that shouldn't get cash. But if they are companies that don't get enough ink, and they are really good companies, then I think you just have to try to figure out if they have good revenue growth, because that's what people want. They want good revenue growth. They want good balance sheets. They want to see bloodlines - that the management has worked somewhere else before and they might have a chance to be successful.

If the companies don't have these things, then maybe they don't deserve to be written about. I think a lot of companies want to be written about, but not everybody deserves to be written about.

VALUERICH: Is there any place for a guy who has an idea or has written a business plan or the beginning stages of a super micro-cap stock?

CRAMER: No! They shouldn't be tapping the public's money. There are professional investors, and those people should be able to seek out the professional investors that are willing to take a chance. But the public is not sophisticated, and the public needs to have its ideas vetted .

One of the things I didn't like about what happened during the heyday was that the SEC stopped the vetting process. They just decided, "Hey listen, anyone can become public:' I think that becoming public should

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be difficult. There were too many companies that became public.

Now the companies that are left are being ignored because they are not big enough to get investment banking. But I want to distinguish that from companies that are desperate to raise money. Good luck to 'em, but there is a process to raising money - and if you can't get a regional bank to raise you money or if you can't get a loan, then don't look to the public. I don't think that's right.

VALUERICH : I remember the SEC receiving a lot of criticism when things were starting to head south. And then, after the bubble burst and everything percolated in Washington, you had Sarbanes-Oxley.

Obviously, we needed some kind of regulation because the accounting wasn't being done right. But as it turned out, the smallcaps are stuck with a very large compliance bill. The larger companies seem to be able to afford it, but we're noticing that it seems to be the straw that broke the camel's back for a lot of smaller companies.

CRAMER: Well, I think that's very true.

What's happened is that it's too expensive to be public. Is that right or wrong? I don't know. I think that it's the price we pay for the public having been so abused by the markets.

There is a greater good here that could be lost, which is that small-caps that deserve funding should get funding. But the markets have spoken. And the government spoke.

The analysis that they've left us at the government level is "Look, we were too soft and now we're going to be really hard:'The pendulum has gone all the way the other way.

I think that something in between would be better. I am not the chairman of the SEC or in Congress, but my take is that they went overboard.

VALUERICH: How do you feel about the way the SEC has adjusted?

CRAMER: I think that the SEC is doing its very best to be sure that everybody discloses everything, which has always been its goal. But SarbanesOxley has raised the price of admission for becoming www.vrexpo .net

public to the point that it's now very limited.

The SEC is never going to say, "This company is not good enough to become public:' But the barriers to becoming public have been raised so substantially now that the SEC's job has been made very easy.

VALUERICH: What do you see as the 11

l've been spending a lot of time analyzing the companies that came public last year ... and I think they are extremely high quality. " future for the exchanges?

CRAMER: The New York Stock Exchange is very unclear. The seats have been going down in value pretty consistently. I'm not sure what the role of the New York Stock Exchange will be in the future. I think that the NASDAQ works very well. The Chicago Mere works very well. The future may belong to those guys.

VALUERICH: What is the one big thing that gets you jazzed these days?

CRAMER: I think trying to find growth, wherever it can be

found. Most of the great growth areas have been pretty much tapped out. So I'm constantly on the hunt to find new ideas and new growth. I'm trying to stay away from the tried and true. Unfortunately, as soon as you get away from the tried and true you have to do a lot more work.

But I think that there are tons of bull markets. They're just not in the large, big-cap stocks that everybody has gotten so comfortable with . You have to keep looking in other places. Those places require a ton of homework and are only really accessible to those who are willing to spend the time.

I've been spending a lot of time analyzing the companies that came public last year, in the new standards, and I think they are extremely high quality. There are a lot of good bargains in there.

VALUERICH : In '04, the IPOs were at about 70 percent of the peak in '99 ...

CRAMER: Yes, a lot of companies still got through . There are some great companies that got through . But a lot of the smaller-cap companies that might have gotten through at another stage didn't get funded . And there are a lot of other companies that are below $100 million in market cap that seem really interesting to me. If we can just get to work and do all the research, that's where the big finds are. I do not think the finds are in the S&P 500.

VALUERICH: Where do you find your stocks?

CRAMER: I use Investor's Business Daily to find a lot of stocks. It is the only paper that really has spent a lot of time analyzing the smaller ones. I'm on the Web all the time looking for new ideas. I read TheStreet.com, obviously. I'm a very curious person about the stock market, so I'm reading the papers and reading the fine print about a lot of little companies, because that's what's exciting to me.

VAL ERICH : Thanks, Jim. CRAMER: Absolutely.

Thank you . I'm sorry I had to let you guys down on the thing [Small-cap Financial Expo]. I just wish I knew when I first talked to you that I was going to have my own show. Now I know, and I know that the strictures are that I'm going to have to be there every night. V R Wmter 2005 ValueRich Magazine 123

â&#x20AC;˘

man

By Will Andrews

If you were going to look for the most outrageous, head-turning ride possible, where would you look: Italy, Germany, the USA, Japan, Sweden?

How about Holland?

Say what - a Dutch supercar?

Yes. Can you say Spyker?

24 1Value Rich Magazine Winter 2005

www. valuerichon Iin e.com

pyker is not your frugal Dutch uncle, and it doesn't have anything to do with going Dutch. Spyker is all Amsterdam look-at-me flash . Looking a bit like something the evil genius would drive in the movie "Sky Captain and the World of Tomorrow;' Spyker automobiles stand out as some of the most visually unique road-burners in existence.

Spyker cars are built for the most passionate enthusiasts - connoisseurs who not only want to buy one of the world 's most unique cars, but who want it built to their specifications. Spyker offers an almost infinite number of options. Every owner can personalize their automobile in any way they want and is personally involved in the building process of the car.

CS Double 12

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Winter 2005 ValueRich Magazine 125

A spectator's view into the lavish interior of a Spyker CS Laviolette through the fighter jet inspired glass canopy roof.

The chassis number of the car and its owner become inseparable. Each owner is provided with a personalized Web page, where the car's build sheet is updated so that the owner can keep track of the building process and maintenance history of the car. The owner can even follow the building process of his car with a Web cam as it is assembled in the Spyker factory.

The latest model in the Spyker line is the C8 Double12, specifically designed and built to compete in LM GT and GT-N (FIA) class racing . The car's name refers to the Brooklands Double Twelve speed record set by race driver Selwyn Edge with a standard Spyker C4 in 1922.

That's right, there is a history of Dutch auto manufacturing, and it goes back long before 1922. The two brothers, Jacobus and Hendrik-Jan Spijker, who were renowned Amsterdam coach builders started the company in 1898 with a Benz powered car that immediately raised eyebrows with its quality 26 1ValueRich Magazine Winter 2005

The 1903 60-horsepower Spyker, above, built by Jacobus and Hendrik-Jan Spijker was the first automobile with a six-cylinder engine, and the first to use permanent four-wheel drive with four wheel brakes. www.valuerichonline.com

ing, speed and the finest coach work. The new Spyker Company introduced the Spyker C8 Spyder at the Birmingham Motor Show of 2000, and the lightweight, mid-eng ine sports car won immediate acclaim from the international press and public alike.

At the 2001 Amsterdam Motor Show, AutoRAI, Spyker introduced its second model : the C8 Laviolette. This beautiful coupe, based on the Spyder, features a glass roof, reminiscent of a jet fighter. The following year, Spyker unveiled the C8 Double12 R, their Le Mans race car, and the road going S-version. Both cars are based on the C8 design, adapted to cope with the grueling demands of top-level endurance racing .

In comparison with its siblings, the body of the C8 Double12 R was extended and widened to enhance its aerodynamic profile and give it even better handling on the track.

To house the bigger wheels, wider wheel arches have been riveted rather than welded onto the car, a classical method of j oining aluminum in the aerospace industry.

Brutal, Yet Refined Style

coach work. Their 1903 60/ 80 horsepower model broke new ground in several areas, including the first six-cylinder engine and the first permanent four-wheel drive automobile with four wheel brakes. But beyond its innovations, Spyker was primarily known as the highest quality car of its day.

During World War I, the company manufact ured 100 fighter planes and 200 aircraft 28 1Valu e Rich Magaz ine Winter 2005

engines of their own design, hence the radial engine and prop logo symbol that survives today. But like many auto makers of the time, after nearly three decades of breaking speed and endurance records, Spyker went out of business in 1925.

Fast-forward to the turn of the millennium, and the company was reprised with all of the same traditions of quality engineer-

The Spyker C8 Double 12 S takes the design language created with the C8 Spyder and the C8 Laviolette to a new level of extremes. This Spyker is the ultimate expression of functional beauty in a high-tech package. From every angle the C8 Double12 S shows its performance potential, its highspeed capabilities, its superior grip and handling. The longer and wider body enhances the purity of the C8's silhouette and radiates an aura of speed.

Even though the C8 Double12 S is the road version of a full-blown race car, its interior offers the comfort and luxury that Spyker enthusiasts love. The leather clad sport seats give superb support and the adjustable steering column and pedal box ensure a perfect driving position .The unique gear lever construction is a creative blend of mechanics and modern art, but it also ensures fast and accurate gearshifts.

The high quality finish of Spyker interiors, with leather trimming and aluminum detailing, underscore their cars' performance aspects, while thoroughly evoking the traditions of 19th century coach work. As a result, these crazy modern super cars have a distinct "Steampunk" quality about them, www.valuerichonline .com

which goes beyond retro.

The dashboard instrumentation design catches the eye. Its gauge fascias resemble the bezels of precision watches. Its exquisitely detailed toggle switches are pure race-tech all the way. A custom dashboard designed by the renowned German watchmaker Chronoswiss may be ordered for all Spyker C8 models. A glass roof similar to that of the C8 Laviolette coupe is standard on the C8 Double12.

Racing DNA

Almost all of the exterior details of the C8 Double12 Shave been designed to enhance the body's aerodynamic capabilities for endurance racing. Extra louvers have been added to the wheel arches and sills, to optimize airflow around the body and to enhance cooling of the front and rear brakes.

At the front, an air intake has been added, while at the rear a subtle spoiler. Optionally,

The CS Double12 R finished tenth in its class and 30th overall in the 2003 24 Hours of Le Mans.

the C8 Double12 Scan be fitted with a fully adjustable rea r wing from its racing brother to add more down force at high speeds.

The C8 Double12 chassis has been extensively modified to compete in the world's most demanding type of raci ng. The longer, wider frame allows fo r the engine to be placed in the frame as low as possible. A 100-liter safety fuel bag is situated centrally in the space frame. Moreover, the chassis features a full-spec roll cage - in th e R version air jacks may be incorporated.

Rather than wooden shoes, Spykers are fitted with beautiful forged alloy multi-spoke rims, standard. Unique 19-inch Aeroblade wheels with central lock nuts are optional.

At the h art of the 8 pyder, Laviolette and Double1 2, is a 4-liter Audi V8 dry sump aluminum engine (type 8) with 90-degree block ang le mated to a synchronize d 6speed Getrag gearbox.

liter Audi W12 dry sump aluminum engine.

This car will have a power output of 500 BHP and will rip off 0-60 mph in less than 4 seconds.

The C8 Spyder is currently going through fi na l safety tests for sale in the United States.

Spyker expects that they will get clearance ea rly thi s year to begin delivering the 91 cars currently on order. The C8 Spyder will ost approximately $270,000 after conversion from the Euro. Spyker does not expect to offer the C8 Doublel2 S in the U.S. until 2006, and believes the ca r will be priced somewhere around $350,000. VR Information: www.spykercars.com

The 400 horsepower engine i natura lly aspirated through ei ght injecti n throttle bodies, has four overh ead cam hafts and five va lves per cylinder and stain less steel 4-into-1 high performance exhau ts. The engine offers top speed perfon 1an e of 187 mph and turns in a 0-60 mph time of 4.5 seconds.

If that's not hot enough power for you, Spyker recently unveiled a prototype Spyker 12 Spyder with an extremely powerful 6-

I

30 ValueRich Magazine Winter 20,b

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6

Nothing seems quite as at home in the sea as a New England lobster boat. Known for being both seaworthy and fast, lobster boats are prized by mariners and are still the workhorses of the northeastern fleet.

Now legendary Italian boatbuilder Machi Craft h~s returned to American waters with a beautiful yacht that combines the unmistakable silhouette of the classic New England lobster boat with the sublime luxury appointments, engineering and state-ofthe-art technology of Italian yacht building- the Machi Craft 51 ' Dolphin.

The 51 ' Dolphin is the first Machi Craft launched since Ferretti Group S.p.A. acquired the company in November 2001 . "Some might be surprised that an Italian shipbuilder would design and build a lobster boat, a craft that is so associated with Yankee traditions;' said Bob Fritsky, C.E.O of Ferretti Group USA. "But our founder, Norberta

The bridge portion of the Mochi Craft 51' Dolphin's main salon can be opened to blue sky and balmy breezes with a large sunroof.

Master (above) and guest cabins have the Ferretti touch, available in teak or mahogany.

34 1Value Rich Magazine l''1nter 2005

Ferretti, was so enthralled with the salty and traditional nature of these beautiful boats that he felt the need to interpret it with the finest designers and technology he could bring to bear. The 51' Dolphin is an Italian paean to our Yankee traditions:' The rounded shapes may have been derived directly from the 1950s American classics that inspired Norberto Ferretti, but the handcrafted fiberglass construction, advanced performance and superior technology of the Mochi Craft 51 ' Dolphin come from pure Italian high-tech shipbuilding - some of the best in the world.

The well-designed and well-balanced deep-V hull is solidly constructed with foam-cored glass stringers and transversals, glass-bonded bulkheads and a riveted and silicon sealed hull-to-deck joint that is glassbonded wherever possible. www. valuericho nI i ne .com

The 51' Dolphin's lobster boat heritage provides ample aft deck space which Mochi has outfitted with an expandable lounge.

There are plenty of performance advantages to the lobster hull configuration .

It tracks well and rides soft and dry in heavy seas. Powered by twin MAN 900 HP common rail engines, the hull offers a top speed of 35 knots.

As with other Ferretti Group manufacturers, Mochi Craft incorporates highly efficient interior design in the new 51' Dolphin, making masterful use of space to offer a level of comfort and livability only available on much larger vessels.

"The 51 ' Dolphin has a number of functional elements and beautiful features that are typically found on Ferrettibuilt luxury yachts;' said Dan Henderson, product manager for Mochi Craft. "Because of these features, the 51' Dolphin is being exceptionally wel l received in the North American market:' The 51' Dolphin's interior is available www. vrexpo .net

Mochi Craft 51' Dolphin Specifications

www.mochicraft-yacht.com

Engines:

Main Dimensions and Data:

2 x MAN V8- 900 CR power 900 mhp I 662 kW at 2300 rpm

Loa =overall length standard ISO 8666: 52'.

Lh =hull length standard ISO 8666: 51 ft. 4".

Lg =waterline length, boat fully laden: 46' 11"

Speed: Maximum speed: 35 knots Cruising speed: 30 knots

Range in nautical miles prediction data: Maximum speed: 250 N.M. Cruising speed: 280 N.M.

Max. beam: 16' 1"

Displacement Unladen: 45,423 lb laden: 54,684 lbv

Depth under propellers, boat fully laden: 4' 3"

Winter 2005 ValueRich Magazine 135

Moe hi Craft 51' Dolphin, available in the U.S.

bridge. With both retracted, the deck house is nearly transformed into an open deck.

With its sun decks fore and aft and open bridge, the 51 ' Dolphin is the perfect yacht for island hopping on sunny afternoons.

Mochi Craft introduced their second lobster boat design, the 72' Dolphin, at the Genoa Boat Show in October 2004.

The 72' Dolphin is the largest lobster boat ever made. Mochi Craft has managed to pack the 72' Dolphin with a master cabin,

The transom door and swim platform opens to a tender garage and nautical storage.

Moe hi Craft 72' Dolphin, available in Europe.

either in teak or mahogany. The main salon features a spacious, port side, U-shaped leather settee that surrounds a folding leaf dinner table. The craft has two large double cabins. The deck and parquet walls of the master and guest cabins, as well as cupboards and shelves are beautifully fin ished in teak or mahogany. Ample storage is available in well-crafted chests of drawers located under the beds and closets.

Two spaciou s sunbathing platforms

a VIP guest cabin, a guest cabin with parallel beds and a fourth cabin with a low "French" bed and a second collapsible bed - all with individual baths. Below the cockpit is a garage with room for a tender and a water motorbike. Unfortunately, Mochi Craft currently has no plans to bring this gorgeous yacht to the USA. V R

36 j Valu e Rich Maga zin e Wmtrr 2005

that can comfortably hold up to si x people provide more than adequate sunning areas. One is on the fore deck and a second expandable lounge on the aft deck. The aft deck also has an ingeniously engineered transom door that drops for easy access to the water via a large swim platform.

Another nice touch is the power sunroof that slides back to open most of the bridge area to blue sky. A large rear glass panel also swings up vertically to open the rear of the

Information:

www.ferrettigroupusa.com www. valuerichonline.co m

Bon Vivant, a luxurious and comfort private villa, is nestled in a two-an half acre tropical garden in the renovv Sandy Lane Estates. Recognized by London Times as "one of the most grac get-aways for the well-heeled", Bon Vi路 is appointed for leisure and sports an staffed to serve your every need.

Our chefs have been trained at the fi restaurants in America. Among them Bernardin, San Domenico, and wr in New York City, Tru in Chicago Lafitte's Landing at Bittersweet Planra in Louisiana.

A GET-AWAY

You'LL NEVER GET OvER.

To see more of this magnificent villa visit us on-line at www.bonvivantvilla.com or call 1-301-656-9400 today.

......

Ph oto by Brian Palmer/iStockPhoto.com

By David Willson The runner races along the waterfront path, his footfalls echoing with slight reverberations in the tropical dawn.

Every day he run s four to six miles, without exception . He has traveled all over the world as an investment banker. He has run in many faraway and exotic locations: Tiananmen Square in China, the Champs-Eiysees in Paris, the Spanish Steps and Colosseum in Rome, Amalfi coast in Italy, the French Riviera . He has met incredible people. He's seen life from the streets and from the boardrooms.

38 ! ValueRich Magazine Winter 2005

An image of Forrest Gump running across America flashes through hi s mind. He chuckles - life is like a box of chocolates.

The runner is in a good mood. Just back from another investment road show, he is reveling in his own home, Palm Beach. There is no place like it in the world . He often tells people it is the best place on the planet - speaking from experience.

Most people still think of Palm Beach as a sleepy old-money resort town . But that couldn't be further from the truth . The old

money dried up; the heirs ran through their fortunes. Palm Beach's Golden Age mansions are being acquired by a new guard- entrepreneurs, CEOs, techno whiz kids- the new kings and queens of commerce.

As a result, the real estate market has skyrocketed . It is not unheard of for a mansion to turn over twice in a year, making millions in profit.

And there's never been more entrepreneurial activity. The Palm Beach to Boca Raton area has been re cognized as the

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fourth- or fifth-best entrepreneurial metro area in the United States for several years straight running by Inc. magazine and the Mil ken Institute. "Not quite the whole story;' he thinks. "Palm Beach has its advantages over cities higher on the list.

"Scripps;' he thinks. "The perfect example of the X-factor:' He remembers hearing the Scripps Research Institute's Palm Beach repre sentative say that the rea son they chose Palm Beach County to build the next big biotech cluster over many other fine locations was the proximity to Palm Beach's new wealthy elite.

Without laying the first brick, they've already ra ised ten s of millions by conducting scientific seminars for philanthropically inclined billionaires. The new Palm Beach A-list event is a seminar on prospecting the human genome. Science is sexy.

And Palm Beach is definitely the place to be if you're chang ing the world and raising the money to do it.

He reflects on thi s as he turns toward his return leg, over t he newly reconstructed

Royal Park Bridge to the West Palm Beach side of the Intracoastal Waterway. Behind him lies Palm Beach's Royal Palm Way, lined by rows of stately namesake trees and investment firms; ahead, West Palm Beach, newly burgeoning and audacious, bristling with construction cranes, rising from behind a jewel-like waterfront.

The road connected to this bridge was once a seedy prelude to the wealthy island enclave. It has now been reborn as a grand boulevard of commerce, the arts and hip urban lifestyle.

Much of what's new and exciting abuts that road. It all began when the distinctive Eberhard Zeidler-designed Kravis Center for th e Performing Arts was built - the first project to capture the imagination of wealthy seasonal visitors and the local gentry alike.

Since then, the route has been the scene of nearly every major enhancement to the area. The previously blighted neighborhood to the north was replaced by CityPiace, a 72acre, $600 million mixed-use development

built with the Old World charm of an Italian village plaza . Its dancing fountains, fine restaurants, clubs, trendy stores and movie theaters attract patrons from up and down the Florida coast.

Acro ss the boulevard, the lavish and hightech Palm Beach County Convention Center holds court. Small as convention centers go, it was built with the construction values and appointments of a five-star hotel, attracting unique high-quality events.

And now, each construction crane, already coming to life at this early morning hour, flags a new upscale residential

West Palm Beach waterfront www.vrexpo .n et

Winter 2005 ValueRich Magazine I 39

CityPiace, with its fine restaurants, entertainment and shopping is just across the boulevard from the Palm Beach County Convention Center.

by publishing a directory of high-rise project - fourteen financial want ads. Realizing at the latest counting, bringing who the reader s would be, 34,000 residential units to the he evolved the concept into a area . This will be a whole new well-designed hybrid business place in two years. and luxury lifestyle magazine Performance center, city with the market information center, convention center and section in it. luxury residential buildings, all It has been over a year now. with quality street-level venThe magazine is a reality. But ues, all inside half a square mile, with every bit of new research, across the bridge from Palm every phone conversation Beach's storied Worth Avenue and fine restaurants- yes, he's ~ with a fund manager, a CEO or :; investment banker, the picture been to many places around the world, but seldom has he ~ grew clearer. seen a plan come together like E A great divide has emerged this. ~ in the public markets. On the .<:: He is about halfway through "- one side, the top 10 percent The Raymond F. Kravis Center for the Performing Arts his run . Endorphins kicked in of NYSE and NASDAQ compalong ago. The runner's mind is working a nies, receiving all of the attention, have time. He had watched the plight of small-cap mile a minute. The way he thinks when he completely commandeered all investment public companies devolve into a complete resources. The bottom 90 percent have runs is different, almost like using brain mess after the market bubble burst, and he browser software - never quite knowing essentially been abandoned by Wall Street. coined the phrase "micro-cap trap:' where the next thought will lead, what the Micro-caps, companies under $200 milAt first his idea had been only about creconnection will be. lion, have been virtually set adrift with no ating a business around matching undervalHe was close to this very spot, running, ued and under-followed small-cap and pinkresearch, no investment banking, no inveswhen he had THE creative idea of his lifetor relations, no exchange listing and onersheeted companies with financial resources 40 I ValueRi ch Magazine Winter 2005

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ous new costs of compliance due to the Sarbanes-Oxley Act. Clearly the financial challenges for smallcaps were not going to be met solely by a magazine directory. So once again, while running, he had an idea while thinking about that new convention center down the road . He would bring America's small-cap companies together in the largest financial and business development event ever!

He'd been to many small-cap financial conferences and found them wanting - endless presentations in hotel meeting rooms. Even the usual closing cocktail hour was a disappointment. He'd seen the trapped expressions on the faces of company CEOs forced to attend these dreadful affairs.

No, if he was going to host America's top business executives, the event would have to be something special - full of energy and promise. Inspired by the surrounding view s of his daily run, he realized that Palm Beach was the best place to host it.

Countless conversations with company presidents raced t hrough his head. "I've

given up on trying to boost share value.

I'm concentrating on my core business for growth. We're going to create growth through acquisitions. Investment bankers won't even talk to me with my market cap:' Obviously, any event that hoped to help small-caps successfully attain growth would have to include t raditional business development as well as financial presentations.

And then he saw it. Like the neighborhoods he runs through, the convention floor would be filled with villages of public companies - a rai sing capital village, a mergers and acquisitions village, a joint ventures and partnerships village, and so on - so that executives could easily discover opportunities by covering ground. The runner picked up his pace.

He researched events and did his due diligence on the convention center and area hotels. He hired show management companies, exhaustively searched until he found booths with furnishings fit for CEOs and financial leaders, hired a film special effects and set company to transform the 100,000-

square-foot main hall into an extravaganza with a city skyline set, sponsors' names in lights, entertainment, cafes, lounges and luxury product displays.

And then he topped it all off with a golf tournament- which has proved to be a big hit. Holding the event in Palm Beach during March has proven to be inspi red. The longer the winter continues, the better New Yorkers and Chicagoans are responding.

Here it is, mid-January, and he's runn ing.

Today's high will be 74 degrees. He makes a mental note to tell his sales staff to mention that fact.

Two months to the event. It's definitely going to fill up. He can see it now. Three hundred public companies, thousands of finan cial professional s feeding on each other's energy, industry leaders and CEOs comparing notes in panel discussions, companies meeting companies, executives making new friends on the golf course.

It's almost here. He can't wait. He's running, running toward the future. Thinking small-cap, living large. VR

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Through the Palm Beach County Convention Center's soaring atrium windows, CityPiace city center is seen bathed in evening twilight.

42 1ValueRich Magazine Winter 2005

www.valuerichon Ii ne .com

Evolved over the last decade, The Palm Beach County Convention Center was designed by the Atlanta architectural firm of Thompson, Ventulett, Stainback

& Associates to fulfill the needs of top tier business meetings and international events that this worldrenowned community attracts.

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By David Willson The Palm Beach County Convention Center, like the area that it serves, is an unusual combination of ideas and influences brought to full fruition.

Much has changed in the world of business, travel and meetings since the original planning for this center began in

the mid-1980s, and in some ways, the new center is as much a reflection of these new realities as it is of the affluent international community of Palm Beach.

The nature of the convention business has changed as a result of tighter corporate budgets, a decrease in the convenience

of air travel post 9/ 11, and the advent of teleconferencing. Major companies like Microsoft have altered their meeting plans to a strategy of smaller, more intimately focused meetings, utilizing on-site satellite uplinks to teleconference the proceedings to the broader organization around the world.

Award Winning Design The county debuted the eagerly awaited $83 million center, designed by the Atlanta architectural firm of Thompson, Ventulett, Stainback & Associates, one year ago. With a total of 350,000 square feet, including a 100,000-square-foot exhibition hall, 25,000square-foot Grand Ballroom, and 23,000 square feet of breakout space, the Palm Beach County Convention Center provides meeting planners a pairing of great style with outstanding ergonomics and the latest communications technology.

While the exterior of the center presents a sophisticated contemporary take on the terra-cotta tile roofs, recessed window s trimmed in stone, bright stucco facades, cultured coral stone and rich mahogany cathedral ceilings of Palm Beach, the interior is more evocative of a luxury cruise ship.

The attention to detail and high quality interior finishes are more in keeping with a five-star hotel than the typical convention center.

Soaring glass atriums punctuated by irregular shaped alcoves provide impressive pre-function space and ample casual

The award-winning Palm Beach County Convention Center. www.vrexpo .net

Winter 2005 ValueRich Magazine I 43

Photos Courtesy of the Palm Beach County Convention and Vistors Bureau

Deck-planked ceilings, prow-shaped doorways, sail-like light fixtures and repetitive wave forms evoke the feeling of a luxury cruise liner.

44 I Value Rich Magazine Winter 2005

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seating areas. Colored glass, wood paneling, and sloping walls mark the entrance to meeting rooms, while planks of rich Brazilian mahogany warm the high ceilings, visually evoking a wooden ship's deck.

A phase two expansion, essentially doubling the center's meeting space, is scheduled to begin shortly. Also in the near future, delayed by post 9/ 11 finance difficulties in the hotel industry and local politics, is a planned on-site 400-room convention center hotel.

There is no doubt that the convention center's initial bookings have been impeded by the lack of an on-site hotel, but Palm Beach has never suffered from a lack of hospitality offerings. Palm Beach County's 16,000 hotel rooms run the gamut from ultra-luxurious resorts to hip boutique properties. A full 3,000 of these guest rooms are within three miles of the convention center.

The center is also just 2.5 miles away from Palm Beach International Airport. One of the nation's busiest corporate and private jet centers, PBI has been voted the third best airport in the United States and sixth best in the world by the readers of Conde Nast Traveler Magazine. With a brand-new $70 million direct interchange route into downtown West Pa lm Beach, it is probably the most convenient air travel fac ility in the nation .

International Hotspot

The best the world has to offer is only a brief tropical walk away from this beautiful

A large, glass enclosed boardroom dominates the two-story breakout wing.

center's location. The 19-acre site sits directly across from CityPiace, West Palm Beach's $600 million Italian plaza inspired mixed-use development featuring a wide array of boutique shopping, fine restaurants and nightlife. Adjacent to the center is the Kravis Center for the Performing Arts, a world famous arts center with outstanding events in multiple venues, including a black box theatre and open air amphitheater.

Famous for its exclusivity, nearby Palm Beach offers luxury boutiques on Worth Avenue, five-star dining, world-class luxury hotels and renowned nightspots frequented by the rich and famous. It is all literally just over the bridge and a few blocks away.

There is no wonder that the biggest buzz in the meetings industry right now is about Palm Beach and its beautiful new convention center. V R

The state-of-the-art 25,000-square-foot Grand Ballroom. www.vrexpo .n et

Winter 2005 Value Rich Magazine 145

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VALUERICH Small-cap Financial Expo

Business and Finance Together

ValueRich will host the largest small-cap financial event of its kind in Palm Beach, Florida, March 9- 12, 2005.

ValueRich ha s expanded the financial conference concept to a large-scale business development and financial exposition, combining bu siness development with investor and financial side functions.

At the ValueRich expo, company CEOs,

FAST FACTS Who should attend the ValueRich Small-cap Financial Expo?

• Public Company Officers • Research analysts • Fund man agers • Money managers · Institutional investors ·Investment bankers • Brokers · Ventu re Capitalists · Serious Investors

For Up-to-date Information visit www.valuerichonline.com

CFOs and their executive teams will make financial presentations to money managers, fund managers, investment bankers, research analysts and institutional investors similar to any other financial conference.

The new, state-of-the-art Palm Beach County Convention Center is perfectly suited for the most sophisticated meetings.

ValueRich will turn the 100,000-square-foot Main Hall into a financial city, with villag es

But they will also have two full days on the floor of the Palm Beach County Convention

based on the public company financial goals of raising capital, merging and acquiring, joint ventures and partnerships, business development and seeking market exposure

Center to explore potential business deals and develop corporate contacts.

What will happen at the ValueRich Small-cap Financial Expo?

Event registration of $7,000 includes:

• Three days of interactive panel discussions, seminars and speakers on a wide variety of topics • The 100,000-square-foot Main Hall of the Palm Beach County Convention Center is laid out in financial "villages" full of small-cap companies • Exciting luxury lifestyle and corporate services displays • A 40-foot tall city center hosted by sponsors will draw attendees together

• 1Ox10 maple paneled, office-style booth in the Main Hall Expo • Stylish stainless steel conference table and chairs • Signage: company name, ticker symbol & exchange ·Carpeting and lighting • A 20-minute formal presentation in break-out room set up for attendees, including all required audio-video

• The Steinway Cafe with professional pianists playing beautiful Steinway pianos • An Italian restaurant, Europeanstyle Bistro and Internet Cafe on the convention floor • Sponsored off-site events and exciting Palm Beach venues • Fine hotels, world-class shopping, warm sun and aqua-blue water

• Three days of networking with company officers, research analysts, fund managers, money managers, institutional investors and investment bankers • Full-page Company profile in the ValueRich Expo Guide, detailing your Company's business objective and contact information with full color logo.

• PGA Champions Course Golf Tournament and 19th-hole reception

46 1ValueRich Magazine W1nter 2005

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• Full access for four to the ValueRich Financial Expo for all three days

Daily non-exhibiting attendance: $150

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in One Large Event and services. Thousands of attending financial and investment profess ion als will easily locate the executive teams of these companies by visiting the villages of their choice.

Event sponsors will host special events and socializing venues, such as the Steinway Cafe, where musicians will play beautiful Steinway Art Case pianos, and the Bombay Sapphire Lounge. A select group of luxury lifestyle companies will be on hand.

High quality food services and restaurants will also be located around the hall.

Network and audio-visual equipped meeting rooms and a glass-walled boardroom overlooking the Main Hall are available by special request.

In addition to hundreds of financial presentations from America's outstanding small-cap companies, a program of speakers

and panel discussions will occupy two full floors of high-tech meeting rooms throughout the event.

No event has ever been held before like the ValueRich Small-cap Financial Expo. But the story doesn't end there. Palm Beach County has been recognized as one of the top five entrepreneurial areas in the U.S. by the Milken Institute and Inc. magazine. It has been said that 25 percent of America's capital wealth is in Palm Beach for the winter. Recently, The Scripps Institute of La Jolla, California, selected the area for their second major biotech facility, giving birth to a biotech cluster.

There couldn't be a more ideal setting for a small-cap expo. Not to mention that Palm Beach is a paradise in March.

On the final day of the ValueRich Small-

cap Financial Expo, attendees and t heir spouses are invited to two world-class PGA National Resort Championship Courses for a day of golf and celebration . After a round of golf, ValueRich will throw a 19th-hole party to close the expo.

This is the event that everyone will be talking about for the remainder of 2005.

Exhibition space is filling fast. ValueRich welcomes your inquiries. V R Information: www.vrexpo.net 561.832.8878 info@valuerichonline.com

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Main Hall

SMALL-CAP FINANCIAL CONFERENCE SCHEDULE

Wednesday, March 9, 2004 12:00 pm- 8:00pm Pre-regi stration and Move-in 5:00 pm- 10:00 pm "Welcom e to Palm Beach" Kick-off Eve nt (Exhibitors and Spon sors Only)

www. vrexpo .net

Thursday, March 10, 2004 7:30am Registration begins 8:00am Continental Breakfa st & Main Exhibit Hall open s 8:00am - 6:00 pm Company Presentation s & Break-out Sessions 5:00 pm - 8:00 pm "Martinis with Maxim" Reception

Friday, March 11, 2004 7:30am Registration begin s 8:00am Contin ental Breakfast & Main Exhibit Hall opens 8:00am - 6:00pm Company Presentation s & Break-out Sessions 5:00 pm - 8:00pm Cocktail Party

Saturday, March 12, 2004 ValueRich Players Classic Golf Tournament 7:00am Registration open s 7:00am - 1:30pm Champion Practice Range Warm-up 8:30am Shotgun Start 5:00 pm- 7:00pm Hole-in-one Cocktail Party

Winter 2005 ValueRich Magazine 147

48 1ValueRich Magazine Winter 2005

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It's enough to make the Goliath investment banks take note and potentially reconsider their cold-shoulder treatment of this overlooked client sector.

Over the past 20 years, investors and individuals have watched as the financial services sector has evolved into a handful of mammoth investment banks, all attempting to achieve global domination. These so-called bulge bracket firms have made a habit of utilizing acquisitions to gain additional services and capabilities. So, it comes as no surprise that they used the same "buy their way in" strategy to enter the technology boom.

High-tech's emergence in the 1990s came in conjunction with an eagerness on the part of large investment firms to identify lucrative IPOs. Since the firms' magnitude resulted in a form of size elitism when it came to clients, few of the bulge bracket firms had existing relationships with start-up tech players.

These relationships had been fostered by the numerous boutique firms in the investment arena.

Wirehouse firms moved swiftly and purchased mom-and-pop shops by the handfuls. Their expediency and greed came at a price once the technology bubble burst.

Big investment firm s were left wounded and soured on small-cap companies, while boutique f rms were largely nonexistent.

This set the stage for the investment banking in ~ ustry of tod ay, one that clearly does not er brace small- and mid-cap firms. The bulge brackets have determined that small companies offer little potential to yield sizable investment banking fees and therefore should be disregarded. The newly created and few remaining boutique firms are willing to cater to these companies, but they typically offer a scaled-down array of products and services and fewer experienced analysts. Small public companies are therefore left with inadequate research coverage and trading and investment services, while entrepreneurs and companies needing access to capital are overlooked.

Maxim Group, an investment banking, www. vrexpo .net

securities and investment management firm, has accomplished something that many others have tried without success - creating a strong and renowned middle-tier investment firm. Since middle-tier firms are often too large to be agile and too small to offer the range of services demanded by major clients, they are frequently viewed as being in the most difficult competitive position. Maxim's management regarded thi s fact not as a hindrance but as an opportunity to successfully distinguish itself in the marketplace.

Maxim Group has never had the desire to become one of the behemoth firms, but it used the bulge bracket business model as a dos and don'ts list for the creation of its own strategy. The Company built its operational structure on a foundation of diversified global product and service offerings, along with experienced investment professionals on par

Maxim Group ... rejected the bureaucracy, biased advice, and revenue models that dictated the disregard of smallcap and emerging-growth firms permeating the wirehouse firms. with those of larger firms. But it rejected the bureaucracy, biased advice, and revenue models that dictated the disregard of smallcap and emerging-growth companies permeating the wirehouse firms. Maxim Group's success is a true testament not only to the vision of its founders but also to the value and potential of unloved small- and mid-cap companies.

The Birth of an Idea In 1998, lnvestec, an established international banking group headquartered in South Africa, decided to start a private client segment in the United States and acquired New York-based registered broker-dealer Ernst & Company. Over the next three years,

the group increased its presence in the U.S. through the additional acquisitions of retail broker Stuart Coleman & Co., the private client and clearing arm of Herzog Heine Geduld, Inc., and in stitutional firm PMG Capital. After a market downturn in 20002001 significantly affected business, lnvestec began a global corporate restructuring. This led to th e decision in 2002 to exit its private client and stock brokering businesses, as the seg ments did not fit the company's overall business model.

The management team of the company's U.S. private client group recognized an opportunity. They were aware of the global restructuring and realized that their segment had become a round peg in a square hole in term s of lnvestec's future business direction . However, they also understood that the group offered an incredible pool of existing talent and strong growth opportunities. Th e management team therefore proposed a win-win proposition, whereby they would purchase the operations. While the newly formed company would sti ll clear through lnvestec, it would run the business, pursue opportunities and determine strategic direction on its own . This was the genesis of Maxim Group.

The Firm has since built a wealth of cottage industries to surround the original retail base and has offices in New York City's Chrysler Building, Long Island, and Chicago. The number of employees has grown from 200 to 308, and Maxim currently offers a wide array of products and services in the areas of wealth management, capital markets, investment banking, research, asset management/ advisory, and estate planning.

Maxim's investment professionals interact with a worldwide network of asset managers, fund managers, hedge funds, pension funds and other institutions. With institutional coverage that spans 20 countries across six continents, Maxim's clients have access to a superior range of services including institutional equity sales, fi xed-income trading, institutional options trading, and in stitutional equity trading.

Winter 2005 ValueRich Magazine 149

It is this breadth of offerings and global reach that is making investors and competitors re-examine their perceived limitations of a middle-tier investment firm.

The Quest for Coverage

Research coverage is often a touchy subject for small public companies. They know the grim truth: Small-cap companies are the most-often-abandoned and undiscovered members of the Wall Street family.

According to data provided by Multexlnvestor, 4,763 stocks had analyst coverage as of August 2001. Two years later, the figure had dropped 14 percent to reach 4,1 03. Disturbingly, more than three-quarters of those abandoned stocks were microcaps with a market cap of less than $1 00 million. This decline has been attributed to everyth ing from increased consolidation in the financial services industry to layoffs and cutbacks resulting from the recent market downturn, to regulatory changes that affect the way analysts are compensated. In addition to causing visibility issues, lack of research increases the potential for market mispricing and ultimately limits companies' access to debt and equity capital markets.

Maxim has built its equity research reputation by focusing on under-covered smallto mid-cap and emerging companies, where valuation levels may be out of sync with fundamental trends. The group utilizes a "bottom up" approach to making investment decisions with due diligence that includes regular consults with suppliers, customers, competitors and senior management. This comprehensive and respected analysis, in concert with the group's 50 years of experience in independent equity research, has positioned Maxim as an industry leader in a largely ignored niche and has generated palpable benefits for its equity research.

Take LCA Vision (NASDAQ: LCAV), for example. Maxim began covering this laser vision correction provider 18 months ago when its stock was trading near $3. Following Maxim's coverage and a secondary on the stock six months ago by UBS Securities,

LCAV reached a high of $36.43 November 24 before splitting 3-for-2 on December 16. Post split, shares have hovered around $23.

The same is true of Microstrategy (NASDAQ: MSTR), a business intelligence software company that was, at one time, beaten up and abandoned by Wall Street.

Over a period of six months, the stock fell from $66 to $30. Maxim's technology analysts met with management and completed an indepth analysis of the company's underlying fundamentals. The Firm initiated coverage in August at $30, and MSTR stock reached a high of$71.12 on December 2.

An Unbiased Approach

According to the Securities Industry Association's 2003 annual investor survey, 61 percent of polled investors felt that a major problem for the securities industry is that financial advisers and firms put their own interests ahead of investors' interests.

Left to Right: Anthony J. Sarkis, Managing Director Investment Banking; Michael Rabinowitz Chairman and CEO; John J. Garrity, Director- Sales and Marketing; Ramnarian Jaigobind, Vice President- Equity Capital Markets SOI Value Rich Magazine Winter 2005

This practice is not surprising, since many of the larger firms have established ties to investment managers that call into question their ability to be objective in investment advice.

Maxim has adopted an unbiased approach by utilizing an extensive group of investment managers, each with a unique style of money management. This allows the Firm to customize its asset and wealth management solutions to best fit each client's needs and goals, and is one of the reasons that the Company now has in excess of $4 billion in client assets.

In order to continuously monitor its group of managers, the Company utilizes firms to screen each of them, including on-site due diligence and quarterly meetings.

Maxim management can therefore

make informed decisions regarding changes to its provider list based on emerging trends and events rather than on recent results, which may not be an accurate indicator of future performance.

Investment Banking and Capital Markets Maxim's investment banking group prides itself on delivering customized solutions to middle-market companies, including smallcap and emerging-growth firms. By establishing solid and enduring relationships with each of its clients, the group is able to identify key opportunities and challenge s and develop solutions leveraging its areas of expertise: Corporate Finance, Mergers and Acquisitions, and Corporate Advisory Services.

Maxim has found value in identifying strong and often unnoticed or underval-

ued small-cap players and providing them access to the equity market. Since its inception, Maxim Group has acted as the lead or comanager of public and private offerings with gross proceeds in excess of $200 million. The Firm has al so participated as a syndicate member in offerings aggregating in excess of $4 billion.

In July, Maxim partnered with Roth Capital Partners to underwrite a secondary offering for Newtek Business Services (NASDAQ: NKBS). Newtek, which provides business services and financial products to the small-business market, sold 6,450,000 shares of stock, generating net proceeds of $20.8 million. The company's stock, which was $3.6 per share in July, reached a high of $4.40 on December 6.

More recently, Maxim acted as comanager on the IPO for Interchange Company (NASDAQ: INCX) and lead underwriter for GuruNet Corporation's (AMEX: GRU) IPO. Both

firms are in the search space, with Interchange providing paid-search services enabling businesses to reach con sumers through targeted online advertising and GuruNet serving as a provider of integrated online reference information. GuruNet's stock price reached $9.43 on December 30 after a $5-per-share initial public offering price in mid-October.

Interchange's stock, originally at $8, has tripled since the October 20 offering and hit a high of $31 .77 on November 26.

Maxim Advisory, the Company's affiliated registered investment advisory firm, has recently launched and closed its inaugural $753MM Collateralized Debt Obligation (CDO). primarily backed by investment grade asset-backed securities. Driven by investor demand for higher yielding alternative investments in the fi xed-income market, the CDO sector has grown from a handful of offerings in 1988 to an expected 200+ deal count by end of year 2004. Maxim Advisory was the collateral manager and teamed with Merrill Lynch and Maxim Group who together comanage the high grade CDO. Merrill Lynch is the industry leader in CDO underwritings, while Maxim Group has a boutique niche in placing equity in various asset classes.

The partnership proved a success, with the Jupiter High Grade CDO closing December 2, 2004. As the arbitrage opportunities in the structured finance world continue to be favorable for the CDO industry, Maxim Advisory looks forward to a busy 2005.

Succeeding Where Others Have Failed The past two years have represented incredible growth for Maxim despite the market's lackluster performance. While the future holds a variety of different opportunities, the Company remains focused on measuring success by the sati sfaction of its clients, not by the size of its business. In fact, its greatest accolades come in the fo rm of client referrals.

Maxim Group has succeeded in a niche where many thought success was unattainable, proving that strength and speed are not determined by size and that unpopular investments can sometimes generate extremely attractive returns. VR Information: Call John Garrity: 800-537-6923 www.maximgrp.com Winter 2005 ValueRich Magazine I 51

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year rather than just a good year. The conundrum associated with these drivers is that the Federal Reserve might take excessive countermeasures to moderate them, to the point of extinguishing the economic recovery. In the Federal Open Market Committee minutes from December, optimism was highlighted as the very reason for justifying interest rate hikes; perhaps even of 50 basis points: "Some participants believed that the pro-

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By Charles V. Payne becoming apparent in the markets for single2004, in my mind, was a great year for the family homes and condominiums." chart) : stock market.

0 President Bush's re-election .

- www.Federalreserve.gov There is no doubt that the greatest One might reach a different conclusion @ A lowered threat of terrorism on highby simply looking at where the major indices profile targets. domestic threat to the stock market comes w ere at the end of the year versus the beginfrom an overly aggressive Fed. It would be ~ Escape from the top of the trading channing of the year, but- much like cros sing a nel. fantastic if it were to take a more delicate street when the WALK sign is illuminated 0 Less crude-oil hype. approach to interest rates and pace increast hi s is taking the easiest approach . Making Ironically, none of the major contributing es in a way that would maybe rock the boat that same trip with traffic barreling but not capsize it. But to do so, down at breakneck speeds from the Fed will have to employ a dif2004 Market Decline and Resurgence all directions would prove a more ferent bedside manner than it has Daily doses of Dow Industrial Index Dec. 30 challenging ta sk, but ultimately in the past. Once Fed Funds rates 11 ,000 .--::-;--:-:-- - - - - - - - - - - - - - - -10,800.30 +390.45 provide greater awareness and satreach 3.5 percent, there should isfaction upon completion . be overwhelming evidence of The market came out of the ,o,soo imminent inflation danger. If the gate with some gusto in January Federal Reserve were to automatiJa n. 2. 2004 10,409.:.82 , 2004, but struggled mightily after cally increase rates at each of this 10,000 initially peaking in mid-February. It year's FOMC gatherings, or if they suffered most from the unresolved decided SO basis point hikes were presidential election and the threat necessary, the results would be Dec of terror. These harmful factors dangerous. p lant ed the seeds fo r an emotionThe employment data for Graph: KRT/ Newscom.com - Edited byVa lueRich ally driven market. There were draDecember 2004 came in at a modmatic boom s and bust s, but the bias was erate pace of 157,000 net new jobs. This factors in the 2004 year-end rally were based decidedly to the downside for most of the on business developments. Yet positive busirate of job and wage growth underscores year. At the same time, there were some very my contention that the economy is healing ness developments occurred in 2004 that good things brewing beneath the surface itself at an acceptable pace. Here again, too should continue into 2005, including: that would eventually be appreciated by the much interference from the Fed could comCorporate pricing power. market. The year-end rally of November and A steady jobs market. pletely reverse that healing process.

December 2004 wa s the result of a series Industry consolidation.

In addition to business drivers, there will of favorable events, beginning with (see These factors should make 2005 a great be other fundamental drivers that deter-

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52 I ValueRich Magazin e Winter 2005

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mine the outcome of 2005. These are pivotal and will dominate the financial headlines and sway institutional investing: Current account deficit.

Budget deficit.

Weak dollar.

Slowing international growth (especially China).

The current account deficit at the end of the third quarter was 5.6 percent of U.S. gross domestic product, and the budget deficit ended the year at $413 billion, or 3.6 percent of U.S. gross domestic product. The U.S. dollar has fallen to all-time lows versus the euro. Last year, one of the most compelling stories was the insatiable appetite of China as it gobbled up every piece of raw metal and slurped down all the petroleum it could get its hands on .

Factors outside the realm of Wall Street and economics could also have significant influence on the financial markets: The election in Iraq.

Permanent tax cuts.

Social Security reform.

Social Security reform has to be pushed aggressively, and though no action will occur this year, it must be perceived that the ball is moving in the right direction.

European Hysteria In Europe and America there's a growing feeling of hysteria ...

-"The Russians," by Sting There has always been an ideological division between the United States and Europe based on religion, envy and competition to be the leader of the world . Through it all, mutual cooperation, commerce and security held friction at bay. Now there is a shift in priorities that threatens to make pettiness and inherent dislike the main drivers of policy.

The irony is that the New Cold War began with the conclusion of the previous Cold

From the view of most Europeans, it all boils down to an arrogant American policy of unilateralism by a cowboy who would rather shoot first and ask questions later. Let's backtrack and look at the series of events that have brought us into this New Cold War. Right out of the gate in his first term, President Bush took actions that unnerved and angered Europeans, such as: â&#x20AC;˘ Withdrawing from the Kyoto agreement.

Opting out of the International Criminal Court.

Nixing the Anti-Ballistic Missile Treaty.

It didn't help matters that the president's first official foreign visitor was Vicente Fox

Mind Over Matter There is also a psychological aspect to the stock market that could initially create a series of disappointments. In the first days of 2005, we learned just how adverse the reaction could be to negative data or subpar economic and corporate performance.

When the ISM manufacturing report suggested that employment was waning, and the Fed suggested that interest rates might rise, the market plunged. Investors were not prepared for any adversity.

The negative mind games of the presidential campaigns hurt the stock market for most of 2004. Even without deep-pocketed political campaigns pushing out negative ads, bad news may be more prevalent than normal in 2005 because we are in the midst of a New Cold War, an economic cold war between Europe and the U.S. that will highlight American problems. www. vrexpo .net

Clerks in the Euro Dollar pit at the Chicago Mercantile Exchange react to the U.S. Federal Reserve Bank's decision to raise interest rates on December 14,2004.

War and the fall of the U.S.S.R. America was left as the world's lone superpower, and the fact that there is only one superpower is unnerving to all the other nations. Despite America's history of good intentions, generous deeds and human sacrifice to help those beyond its own borders, we have increasingly been demonized in much of the world, particularly in Europe.

Hastening the divide between the U.S. and Europe were the actions and debates leading up to the war in Iraq. A war of words escalated on both sides of the Atlantic, and those words are now germinating into actions. Hence, the New Cold War.

of Mexico.

The Europeans had more ammunition to despise Bush and America after the president imposed steel import tariffs and offered U.S. farmers new subsidies- moves that were widely criticized at home as boldfaced attempts to buy votes in the Rust and Bible belts.

This time, European reaction went beyond the typical game of international politics. The EU, with the help of the World Trade Organization (WTO), imposed sanctions on a wide variety of U.S. goods, including bras, toilet paper, T-shirts, ski and bowling alley equipment, and ballpoint Winter 2005 Value Rich Magazine I 53

clout if they want to lead the world. To meet this criteria, the EU and its common currency were created - and now, perhaps, they are in the process of creating a United States of Europe.

This year, several European countries will vote on a constitution that would serve as the cornerstone of consolidating Europe. I believe it would be a hor:0 rendous mistake for small 0\ ~ European countries to buy ~ into this constitution . At the "' ~ end of the day, the ruler of ~ this single nation would be ~ the same Franco-German :5 % alliance that has historically .t: ~ sought to rule the continent.

2 Be that as it may, Europe 0 .t: c.. must muscle up if it is to compete with the U.S., Japan French President Jacques Chirac (left) and German Chancellor Gerhard Schroeder want an EU constitution. and China, with its charging economic boom (not to From a macro economic point of view, should the Euro mention the Asian tigers and be stronger than the dollar? a determined India).

Country Projected 2005 GDP FY04 Unemployment Rate That bring s us to the unprecedented rally of the European Union 1.5% 8.9% euro in 2004. A strong euro, like the U.S. trade deficit, pens, among other items. The tactic worked . presents a greater problem for Europe than The U.S. cried "Uncle" and repealed the ta x the weak dollar presents for the United breaks. Of course, this was after the EU penStates. Ironically, all of the pressure has been alties had already cost U.S. companies some on President Bush to address the problem of $300 million. the weak dollar.

The EU and WTO seem to be joined at Outside of the fact that the strong euro the hip in an attempt to usurp the economic provides an inflation buffer and mitigates the power and influence of the United States. price of crude oil (which is quoted in dollars), This is the level at which the New Cold War I'm mystified as to why euro zone finance becomes most intriguing and frightening . It ministers aren't in the market attempting is one thing for a consumer in Paris to shun to adjust the imbalances. It could simply be Marlboros for a European brand, but when that the citizens of Europe are mistakenly seeing the strong euro as some sort of valibroad macro strokes are made, the repercussions are almost limitless. dation of the EU's role as a would-be superpower, and also as an indictment against the Power Play policies of America . . . . everybody wants to rule the world ...

If you want to throw budget deficits into - "Shout," by Tears for Fear the controversy, then it should be noted that Despite a resume that includes the first over the past two years both Germany and democracies and breakthroughs in science, France have violated EU rules on excessive math and exploration, as well as experideficits. Moreover, France is projected to ence that could only come with age, the have a budget deficit of 4 percent in 2005, Europeans need to wield more economic which is well above the 3 percent limit 54 1Value Rich Magazine ;

1ntrr

2005

established by the EU. In short, it is a joke that the euro is so strong and will become even stronger this year.

There is hope on the continent that the euro will become the de facto currency of choice for international investors, replacing the dollar, which replaced the British pound many decades ago. This hoped-for outcome will not materialize, because to rule the world one must have the strongest military, the best technology, the strongest economy (not currency) and the wisdom to make the right (not the most popular) decisions.

War of Words

In the New Cold War, espionage is done in the open . The recent spate of negative stories on U.S. drug makers all originated in European magazines.

The impasse between America and Europe ought to be a temporary situation, but there are reasons to be very concerned.

More than $600 billion in commerce transpires annually between the two entities. It would be a shame to jeopardize this symbiotic relationship, especially as the rest of the world 's nations are growing their economies and looking for opportunities. However, one can easily imagine that an anti-American campaign will be created in order to push the agenda of voter adoption of a European constitution .

A major terror attack on European soil or an invasion from outer space could change the equation and reunite old friends.

However, its looks increasingly clear that 2005 will be a long and trying year for America and Europe - and the casualties could be our economies and decades of goodwill. V R Sources: Le Monde, Th e Economist, th e BBC, Jeremy lsoocs and Taylor Downing, Financial Times, and The Brookings Institu tion.

Charles V. Payne is the CEO and principal analyst of

Wall Street Strategies, a leading independent stock market research company. He is a regular contributor to internationally televised networks and news organizations and will be a keynote speaker at the ValueRich Small-cap Financial Expo in Palm Beach, Florida; March 2005. www.wstreet.com www.valuerichonline .com

Mr. Public Company CEO

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INVESTMENT BANKING/BUSINESS OBJECTIVE:

INVESTMENT BANKING/BUSINESS OBJECTIVE:

Baltia is seeking capital

FinanciaiContent seeks further investment for a strategic merger or acquisition ventures.

COMPANY DESCRIPTION

COMPANY DESCRIPTION

Baltia's objective is to provide full service passenger, cargo and mail transportation between the U.S. and Russia.

FinanciaiContent, Inc. is a leading provider of financial data and business applications to online media and financial services companies worldwide.

CONTACT INFORMATION

CONTACT INFORMATION

FinanciaiContent, Inc. Wing Yu, Chief Executive Officer Ph: 650-837-9850, Fax: 650-745-2677 wyu @financialcontent.com www.financialcontent.com

Baltia Air Lines, Inc. Igor Dmitrowsky, President Ph: 718-275-5205, Fax: 718-275-4731 baltia@juno.com www.baltia.com

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INVESTMENT BANKING/BUSINESS OBJECTIVE:

RaserTechnologies, lnc., seeks capital.

NetSol's Investment Banking objectives are strategic acquisition s and capital raises. These objectives are currently handled by Maxim Group.

COMPANY DESCRIPTION

COMPANY DESCRIPTION

Founded in 2001 , Raser Technologies believes that its pending-patents cover breakthrough electric motor technology.

CONTACT INFORMATION

CONTACT INFORMATION

Raser Technologies, Inc. David West, VP Marketing Ph: 801-765-1200, Fax: 801 -374-3314 dwest@rasertech.com www.rasertech .com REQUESTING:

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INVESTMENT BANKING/BUSINESS OBJECTIVE:

Sky Way Aircraft is seeking to raise capital.

COMPANY DESCRIPTION

Sky Way is a development stage company w ith a focus on In-flight wireless services.

CONTACT INFORMATION

Sky Way Communications Holding Corp.

David Huy, Direct or of Sales/Marketing Ph: 727-53S-8211, Fax: 727-535-1930 dhuy@swyc.us www.skywaya ircraftsecurity.com REQUESTING:

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INVESTMENT BANKING/BUSINESS OBJECTIVE:

Semot us Solutions is seeking capital only through a strategic relationship or partnership.

COMPANY DESCRIPTION

Semotus is a provider of software for the enterprise applications, connecting employees wirelessly to critical business systems, information and processes.

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Semotus Solutions Anthony LaPine, CEO Ph: 408.358.7100, Fax: 408.358.7110 i r@semotus.com www.semotus.com

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SYMBOL:

INd•tH!·M STAN DARD MANAGEMENT

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INVESTMENT BANKING/BUSINESS OBJECTIVE:

The Company is seeking acquisition candidates, and/or seeking strategic merger, partnerships, joint ventures or acquisition.

Standard Management Corporation is seeking strategic acquisitions with stron~ top and bottom line growth that can be vertically integrated into one of our fivt separate channels of healthcare distribution.

COMPANY DESCRIPTION

COMPANY DESCRIPTION

Eldorado Gold Corporation is an international gold-producing company currently active in development and exploration.

Founded in 1989 as a financial services company, Standard Management Corpo ration has grown to a NASDAQ-traded corporation with $2 billion in assets. Tho decision to diversify and expand into home health care in 2002 resulted in a com mitment of more than $40 million to its subsidiary, U.S. Health Services.

INVESTMENT BANKING/BUSINESS OBJECTIVE:

CONTACT INFORMATION

Eldorado Gold Corporation Nancy Woo, Manager, Investor Relations Ph: 604-601 -6650, Fax: 604-687-4026 nancyw@eldoradogold.com www.eldoradogold.com REQUESTING:

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Standard Management Ph: 317-574-6200; 800-222-3216 www.sman.com www.ushscorp.com

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INVESTO RS CA PITAL

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IN VESTORS CAPITAL H OLDINGS

INVESTMENT BANKING/BUSINESS OBJECTIVE:

INVESTMENT BANKING/BUSINESS OBJECTIVE:

Company is Seeking strategic alliances, merger, joint venture, acquisition

Investors Capital Holdings is currently exploring merger and acquisition oppor tunities.

COMPANY DESCRIPTION

Human BioSystems is an emerging biomedical company that is positioned to become a global leader in the development of preservation technologies that could dramatically extend the storage time for blood platelets and donor organs.

COMPANY DESCRIPTION

CONTACT INFORMATION

CONTACT INFORMATION

Human BioSystems Harry Masuda, Pres.: 650-323-0943 Bob Strom, VP Sales and Mktg: 760-341 -0132 Rich Kaiser: 1-800-631-8127 www.humanbiosystems.com

Timothy Murphy, CFO Investors Capital Holdings Ph: 800-949-1422, Fax: 781-593-9464 info@investorscapital.com www.investorscapital.com

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Investor Capital Holdings, is a diversified financial services holding company.

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Newtek Business Services, Inc.

Im:•+

SYMBOL :

INVESTMENT BANKING/BUSINESS OBJECTIVE:

Newtek Business Services, Inc. is seeking: Mergers and acquisition opportunities; Research and investment banking support COMPANY DESCRIPTION

Newtek Business Services' mission is to become the premier provider of quality financial products and business services to small and medium-sized businesses across the U.S CONTACT INFORMAnON

Newtek Business Services, Inc. Barry Sloane, Chairman and CEO Ph: 212-356-9500 ext 101 , Fax: 212-643-1006 bsloane@newtekbusinessservices.com www.newtekbusi nessservices.com REQUESTING :

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Seeking acquisition candidates and public technology company clients that needs to expand their core technology.

COMPANY DESCRIPTION

UTEK• is an innovative technology transfer company dedicated to building bridges between university-developed technologies and the commercial sector.

CONTACT INFORMATION

UTEK Corporation Clifford M. Gross, Ph.D., Chief Executive Officer Ph: 81 3-754-4330 Ext 227, Fax: 813-754-2383 cgross@utekcorp.com www.utekcorp.com REQUESTING :

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The Company is seeking an ongoing relationship with an investment banking firm to build upon, and to establish a path towards a possible future financing.

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INVESTMENT BANKING/BUSINESS OBJECTIVE:

Telkonet, lnc. is seeking strategic partnerships with value-added resellers, systerr integrators and distributors.

COMPANY DESCRIPTION

Media Net encompasses an integrated group of operating divisions that revolve around many aspects of media and technology including, branded rewards programs and internet portal applications, television and video production and intellectual properties (Howdy Doody).

CONTACT INFORMATION

Media Net Group Technologies, Inc. Martin Berns, CEO Ph: 954-974-5818 ext. 202, Fax: 954-974-5720 mberns@medianetgroup.com www.medianetgroup.com, www.bsprewards.com REQUESTING :

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The Company is the leading developer of high-speed Internet distribution ove the existing electrical lines within commercial buildings.

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Telkonet, Inc. Ron Pickett, CEO Ph: 240-912-1800, Fax: 240-912-1839 www.telko net.com

Invest ors Stock Daily, Inc. Jody M. Janson Ph: 585-232-5440, Fax: 585 -232-5457 jody@istockdaily.com www.istockdaily.com

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on screen technologies , Inc .

INVESTMENT BANKING/BUSINESS OBJECTIVE:

INVESTMENT BANKING/BUSINESS OBJECTIVE:

Hollywood media Corp is currently seeking: Mergers & Acquisitions; Seeking Strategic Partnerships & Joint Ventures; Seeking Market Support

OnScreen is currently seeking strategic mergers, partners, joint vent ures and/ or acquisition opportunities.

COMPANY DESCRIPTION

COMPANY DESCRIPTION

Hollywood Media Corp. is a leading provider of information and ticketing for the Internet, Media and Entertainment Industries.

OnScreen Technolog ies, Inc. is developing next generat ion LED video displ ay utilizing a revolutionary patent pending architecture.

CONTACT INFORMATION

CONTACT INFORMATION

Hollywood Media Corp.

La Vonne Melheim, Executive Asst. to Mitchell Rubenstein Phone: 561 -998-8000 x 246, Fax: 561 -998-2974 lmelheim@boca.hollywood.com www.hollywood.com REQUESTING :

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SYMBOL :

I)URASWITCH' I•·ti~'' The world is switching. • INVESTMENT BANKING/BUSINESS OBJECTIVE:

Duraswitch is seeking additional partners in licensing existing and new technologies.

COMPANY DESCRIPTION

Duraswitch licenses enabling technologies to established manufacturers and OEMs worldwide. Its focus is the multi-billion dollar electronic-switch market.

CONTACT INFORMATION

Heather Beshears, VP Corporate Communications Ph: 480-586-3300, Fax: 480-844-9625 heather@duraswitch .com www.dura switch.com

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INVESTMENT BANKING/BUSINESS OBJECTIVE :

M-Wave, inc. is currently seeking market support COMPANY DESCRIPTION

M-Wave is a service provider of high performance printed circu it boards used in a variety of digital and high frequency communications applications.

CONTACT INFORMATION

INVESTOR RELATIONS CONTACT

M-WAVE Phone 630-562-5550 Fax: 630-562-2431 www.mwav.com

Aurelius Consulting Group, Inc. Dave Gentry Phone 80Q-644-6297 info@runonideas.com www.ru nonid eas.com

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INVESTMENT BANKING/BUSINESS OBJECTIVE: INVESTMENT BANKING/BUSINESS OBJECTIVE:

HearUSA is Seeking Market Support. The Company seeks to expand the currer 18,000 retail shareholders to include a significant percentage of institutional i1 vestors as a result of support from the right investment banking organization.

Seeking Market Support COMPANY DESCRIPTION

COMPANY DESCRIPTION

EDGAR Online is the leader in the mmmg and dissemination of the SEC's electronic filing system, with over 24,000 subscribers

Based in the U.S., HearUSA is engaged in providing professional hearing heal1 care products and services. The Company has 157 company-owned and operatE centers in 11 U.S. states and one Canadian Province, Ontario

CONTACT INFORMATION CONTACT INFORMATION

EDGAR Online, Inc. Jennifer Blackwell, Marketing Manager Ph: 203-852-5627, Fax: 203-852-5667 jblackwell@edgar-online.com www.edgar-on line.com

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REQUESTING:

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Paul A. Brown, M.D., Chairman Ph: 561 -478-8770 ext. 123, Fax: 561-478-9603 pbrown@hearusa.com www.hearusa.com

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ROYALE ENERGY, INC. INVESTMENT BANKING/BUSINESS OBJECTIVE:

Royale Energy is currently Seeking Market Support

INVESTMENT BANKING/BUSINESS OBJECTIVE:

COMPANY DESCRIPTION

Reliv's investor relations business plan's primary goal is to increase tradin volume by building visibility among institutions and long-term investors.

Royale Energy's principal lines of business include acquisition of natural gas production; proven reserves, and drilling of both exploratory and developmental wells using 3D seismic imaging.

CONTACT INFORMATION

Royale Energy, Inc. Chanda Ida no, Director of Marketing Ph: 800-447-8505 chanda@royl.com www.royl.com REQUESTING :

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COMPANY DESCRIPTION

Reliv International is an international manufacturer and network marketer nutritional supplements.

CONTACT INFORMATION

Reliv International, Inc. Fred Nielson, Manager IR Ph: 636-537-9715, Fax: 636-537-9753 fnielson @relivinc.com www.reliv.com

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IntegratedEnvironmental Technologies, Ltd.

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INVESTMENT BANKING/BUSINESS OBJECTIVE :

INVESTMENT BANKING/BUSINESS OBJECTIVE :

Integrated Environmental Technologies, Ltd. is seeki ng market support.

Seeking Market Support

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COMPANY DESCRIPTION

COMPANY DESCRIPTION

Integrated Environmental Technologies, Ltd. operates two technology divisions: EcaFio'MDivision Water Treatment Disinfection and Purification; Essential Oils Divi sionOil Extraction from Botanical s

TechTeam Global delivers global, multilingual help-d esk services and specializec IT solutions via our global locations in the United States, the United Kingdorr Sweden, Germany, Belgium, Romania, and through our wholly owned subsidiarie Digital Support Corporation, Sytel, Inc., TechTeam A.N.E., and TechTea m Cyntergy.

CONTACT INFORMATION CONTACT INFORMATION

Integrated Environmental Technolog ies Ltd. Bill Prince, President & CEO Ph: 843-390-2500, Fax: 843-390-3900 bill.prince@ietltd .net www.ietlt d.net REQUESTING:

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TechTeam Global Inc. David W. Morgan, VP, Chief Financial Officer, Treasurer Ph: 248-263-5741 , Fax: 248-357-0840 dmorgan@techteam.com www.techteam .com

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CHARLES&COLVARD MOl

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INVESTMENT BANKING/BUSINESS OBJECTIVE:

INVESTMENT BANKING/BUSINESS OBJECTIVE :

Seeking Market Support

Attract Market Support COMPANY DESCRIPTION

COMPANY DESCRIPTION

Charles & Colvard, Ltd., manufactures, markets and distributes Charles & Colvard created moissanite jewels for sale in the worldwide jewelry market

Lumera is a nanotechnology platform company delivering innovative product! based on advanced materials and processes for the biotechnology, optical and communications markets.

CONTACT INFORMATION

CONTACT INFORMATION

Charles & Colva rd, Ltd. Jim Braun, VP Finance & CFO Ph: 919-468-0399, Fax: 919-468-5052 jbraun@moissanite.com w ww.m oissanite.com

Lumera Corporation Tom Mino, CEO Ph: 425-415-6900, Fax: 425-398-6599 tom_mino@lumera.com www.l umera.com

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Wmter 2005 ValueRich Magazine \ 71

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74 1 ValueRi ch Magazine Wnter 2005

www. valuerichonline.com

. . CONNECT However, it takes more than a "seek and ye shall find" drilling mentality and some start-up capital to create a success story in this consolidating industry.

Royale Energy (NASDAQ: ROYL), a nationally recognized independent E&P company, has demonstrated that a company's business strategy and management team can prove just as valuable as the essential commodities the company seeks to produce.

While low energy prices in the mid-'80s had consumers in far better spirits than today's heightened levels, gas and oil producers were not overjoyed . Incorporated in 1986, Royale Energy, Inc., capitalized on the state of the industry by utilizing the remainder of the decade to build its natural gas reserves through the purchase of producing wells and developmental properties in recognized fields.

During the 1990s, th e Company continued its rapid expansion with strategic acquisitions and successful production and began trading on NASDAQ in 1994.

Financial performance has been impressive, with FY03 annual revenue of $23.3M, nearly double the 2000 level. The Company also recently ranked eighth for highest return on Stockholders' Equit y of all publicly traded oil and gas companies.

With less than one-third of Royale's 50,000-acre land position developed and a proven business strategy, the prospects for continued growth are solid. One might say, that despite the inherent risks in the industry, this company has tru ly struck oil.

Shared Results Energy exploration is inherent ly a risky business, but can also be an extremely lucrative one. Royale has developed a Direct Working Interest investment program which offers industry pa rtners and qualified investors the opportunity to participate in the drilling of wells and share in the profits they generate. By selling a portion of the working interest to others, the Company is able to drill twice as many wells in different areas, thus reducing its drilling ri sk through the diversification of drilling activities and allowing for great er expansion.

Diversification is also inherent in the investor side of the proposal. Each investment project contains five or more www. vrexpo .net

RoYALE ENERGY, INc. ROYL:NASDAQ CONNECT Chanda ldano Director of Marketing chanda@royl.com

Royale Energy, Inc. 7676 Hazard Center Dr. #1500, San Diego, CA 92108 Ph: 800-447-8505

www.royl.cor11

wells in different natural gas and oil fields, which lessens the amount of risk faced by each investor.

To align Company interests with that of its investment partners, Royale has up to 50% ownership interest in each of the wells offered as a part of the Direct Working Interest program . This position is unique in the industry and ensures the Company seeks to attain the highest success rates and best returns at the minimal risk structure.

Investors have their own set of rewards which include both monthly income and tax advantages. In response to the current state of the E&P industry, the U.S. Government created ta x advantages to encourage the exploration and development of oil and

natural gas reserves domestically. As such, this type of investment in drilling projects by individuals, partnerships and corporations is 100% tax deductible.

An Added Dimension The realization of industry risks in the form of non-producing wells, or dry holes, can mean the loss of huge chunks of invested capital, equipment usefulness, and time. To help mitigate the ri sk, the use of 3D seismic surveys is integral in Royale's business strategy.

In seismic imaging, which is similar to ultrasound, sound reflections are used to image subsurface structures. Sound traces are transmitted into the earth and reflected off the soil and rock layers back up to the surface into geophones, which are then transformed into a picture. Since gas and oil always migrate under pressure to the highest trap, it is critical to find the optimal location at the top of the trap.

In contrast to traditional 2D seismic, 3D generates more elaborate readings. 3D imaging has a much tighter grid pattern and provides information continuously throug h the subsurface, whereas 2D seismic reveal s only strips of the information. Despite being costlier, the benefits include fewer dry holes, more optimized well locations and a better understanding of the nature of prospects.

While it does not eliminate all exploration risk, 3D imaging improves success rates and places productive wells on optimal locations which should deliver better production and have a slightly longer life.

Due to the procedure's cost, many companies opt not to utilize 30 imaging Winter 2005 Value Rich Magazine I 75

to the extent Royale does. However, Don Hosmer, CEO of Royale, thinks that is a mistake. "It's very expensive;' he says, "but we feel in the long run it's less expensive t han drilling dry holes and not drilling in the optimum area or structure:' Royale's projects are primarily within existing producing fields where th ey've purchased the existing production and then acquired 3D seismic imaging of the area. This enables the Company to find bypassed natural gas reserves in the nooks and crannies th at couldn't be imaged on 2D. They also utilize the data provided by previou sly drilled wells located on the surrounding area to improve accuracy.

Royale attributes much of its drilling success to the use of the advanced technology. In 2003 alone, fifteen of the seventeen wells it drilled were producers, a drilling success rate of 88%. These levels are a direct boost to the bottom line and increase the Company's attractiveness to investors.

Location, Location, Location

The Company's primary focus is currently on its properties in the Sacramento and San Joaquin Basins near the Bakersfield area of California. Besi des serving as Royale's headquarters, the lure of California is its

position at the end of the pipeline grids.

Natural gas production flowing from the producing areas of Texas and Oklahoma is being absorbed before it reaches California by the growing economies of Nevada, New Mexico and Arizona . Likewise, natural gas flowing from the northern producing regions of Canada and Northern California is absorbed by the economies of Washington and Oregon. California currently imports almost 84% of its natural gas supplies from sources outside the state and is finding competition for the resource stiff. This situation creates value and demand for instate natural gas suppliers such as Royale.

Additional wells in Utah and the Gulf Coast basins of Texas and Louisi ana, along with joint ventures in the Gulf Coast ofTexas provide Royale with expanded inventory and diversified opportunities.

Where's The Love?

Despite market conditions of declining supply and growing demand which seem to imply a positive investment environment, the energy sector is underowned and unloved by many analysts and investors.

Part of the skepticism and hesitation is due to continuous predictions of lower energy prices. However, while crude oil prices are moderating, domestic natural gas prices

are poised to remain strong. The nation's economic recovery and abundance of power plants fueled by natural gas keep demand up.

This is in conjunction with a steady decline in North American natural-gas reserves since the 1980s, with the majority of obvious producing areas already developed. Due to the difficulty involved with transporting super-cooled gas, importing is not a viable solution to the current demand situation and makes domestic producers all the more critical.

Most market investors still seem bent on pursuing elusive technology and Internet stocks, despite their unpredictable earnings. Meanwhile, the energy sector, which accounted for approximately 60% of the profits in the S&P 500, has been largely ignored. Believing that the energy crisis will continue throughout the decade, some investors see this as an opportunity to make an energy play. Select stocks in this sector offer equally attractive deals as tech holdings, with better earning consistency, higher dividends and significantly lower multiples.

While analysts have not always lauded the energy sector, Hosmer does not regret Royale's decision to go public. "The fact that we are a NASDAQ publicly traded company is an advantage;' he says. "It means we are more lean and able to move more quickly on opportunities:' In fact, Royale's cost structure is so low, they would still be able to post good profits if natural gas prices fell from the current level in excess of $5 per mcf to $2-$2.5 per mcf.

Public status is also attractive to landowners since it means the Company is more transparent and they can see their landowner royalties and expenses are allocated properly.

Gushing Success

Hosmer sees Royale's success as a winwin situation. "Short term, as the price (of natural gas and oil) spikes, investors are attracted to the higher rates of return;' he says. "This brings more capital to the industry, so consequently we'll drill more wells and bring more supply on. Therefore, what is great for investors in the short term will be a positive thing for the economy and consumers in the long run :' VR 76 1Va lueR ich Mag azin e Winter 2005

www. val uerichonlin e .com

CoRNELL CAPITAL PARTNERS, LP Flexible and Unique Financing Solutions For Growing Companies Cornell Capital provides flexible financial solutions to growing micro to mid-cap companies in the U.S. and around the world. We work closely with management to design custom tailored, alternative financing structures to meet capital needs and corporate goals.

QUEENSLAND GAS COMPANY

Quant.~.m

EVS Elbit Vision Systems Ltd.

Quantum Energy, Ltd. (ASX: QTM) has obtained A$5,000,000 Equity Commitment October 2004

Queensland Gas Company Limited (ASX:QGC) has obtained AUS $8,000,000 Equity Commitment July 2003

Elbit Vision Systems (EVSNF.OB) has obtained $10,000,000 Equity Commitment March 2004

Can Argo Energy Corporation MobilePro Corp (MOBL.OB) has obtained $100,000,000 Equity Commitment May 2004

CanArgo (AMEX: CNR) has obtained $20,000,000 Equity Commitment February 2004

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Headquarters 101 Hudson Street, Suite 3700, Jersey City, NJ 07302 Tel: 201-985-8300 Fax: 201 -985-8266

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www.cornellcapital.com

New York City, New York

The

Market's Hearing Loss

By Liza Grant Smith

78 1ValueRich Magazine Winter 2005

www. value richonline .com

I

HearUSA Inc. (AMEX: EAR), the nation's third-largest provider of audiological products and services, has done, by many standards, the impossible. The Company boasts an 18-year operating hi story (a tenor rare in the treacherous small-cap market) and a successful roll-up strategy (previously an oxymoron). and has been a primary driver in reshaping the hearing care industry. Yet, despite results that appear to speak volumes, the market remains deaf to HearUSA's value. Which brings us to a critical question: "If a small-cap company has resounding achievements but no one is there to hear them, do they make a sound?"

The following story is not for the squeamish . HearUSA, originally HEARx, went public at $1 0/ share in February 1988.

Due to the previous business success of founder and Tufts Medical School graduate Dr. Paul Brown, the investment community had expectations of grandeur. The stock rose to $16 in the first ninety days, and early investors made 60 percent on their money.

Unfortunately, inherent in these investor expectations was an unrealistic timeline.

When HEARx did not immediately explode into a big company, investor positivity wavered. The stock fell to $2/ share by April of 1994.

The ride was far from over. Unbelievably, a mere two years later, EAR reached an all-time high of $75/ share. At this point the Company had a market value of $750 million, with $6 million in revenue.

The end of these glory days was jarring.

By February of 2003, the stock had fallen to $0.21 / share. The market value was now $6 million for a $70 million revenue company.

Think you can't take any more? Imagine how the Company and its investors felt.

After fluctuating between $1 and $3, the stock is now hovering around $1 .80, having dropped from 3.07 one year ago.

More than merely a story of investor windfalls and losses, this is about what happens when a small-cap company gets caught in the destructive tidal pool of inaccurate market pricing.

Starting a Revolution

Dr. Brown is no stranger to building a powerhouse from the ground up. In 1967, with a $500 loan from his fatherwww. vrexpo.n et

. . CONNECT

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Hearu EAR:AMEX

CONNECT Paul A. Brown, M.D., Chairman Ph: 561-478-8770 ext. 123 Fax: 561 -478-9603 pbrown@hearusa.com

in-law, Brown incorporated Metropolitan Pathology Laboratory with the seemingly egotistical belief that he could do a better job processing tests than hospital labs, where tests were late, often inaccurate, and inflated in price. He single-handedly set out to change the situation, and ultimately his success resulted in Corning Glass Works' purchase of the Company for $140 million in 1982. That company is now known as Quest Diagnostics (NYSE: DGX), with revenues in excess of $4 billion.

Dr. Brown approached HearUSA with much the same mindset. Recognizing significant problems and deficiencies in the audiological services industry, he formed the Company with the goal not of building a profitable entity, but 'rather of changing an industry.

Formula for Success

HearUSA currently owns and operates 154 hearing centers in 11 states and one Canadian province, each staffed by a licensed and credentialed audiologi st or hearing aid dispenser. These stores serve as the Company's base business.

Original Centers

Presently, HearUSA is the only major hearing care provider with centers approved by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO). All of the Company's 80 original stores have earned this recognition. Accreditation by JCAHO is considered the Gold Standard in health care, and means that the

HearUSA Inc. 1250 North point Parkway West Palm Beach, FL 33407 www.hea ru sa.com

Company has volunteered to undergo a challenging, comprehensive evaluation by an independent agency. It is also the key to obta ining managed care contracts.

The Company has contracts with more than 500 health-care providers, which includes over 600,000 capitated Medicare, managed -care lives. As a result of these contracts, HearUSA receives a per-member, per-month fee.

Acquired Centers

Acquisitions are also central to HearUSA's business model. The Company currently has 76 stores throughout North Am erica, obtained through its roll-up endeavors.

Due to their geographic scattering, these stores are unable to obtain managed care contracts, which require a facility to be located every 20 minutes or 20 miles from the patient population base. As such, they function primarily as retail operations for self-pay patients.

Dr. Brown believes the historical failures of roll -ups is due to the purchasing company's lack of understanding of the business it is buying, and an absence of systems put in place to facilitate acquisition absorption.

HearUSA has overcome both of these hurdles with extensive industry knowledge and a proprietary center management and data system called CMS (Center Management System).

Operated over a WAN, CMS links all locations with the corporate office and serves to manage patient information and process point-of-sale customer transactions.

Winter 2005 ValueRich Magazine I 79

The Company's recent acquisition of 80 Helix stores, which was absorbed in under 90 days, is testament to the strength of CMS. With a still-fragmented market of approximately 9,000 independent practitioners offering hearing care products and services, HearUSA has an immense pool of future acquisition prospects.

patients from a managed care company or a company that needs to have testing done. Currently, this segment earns money through the member administrative fees pa id. However, the Company plans to establish a group purchasing program where network members can buy the hearing aids at a discount through HearUSA, thus saving the member money and generating an additional revenue stream for the Company.

To avoid issues with standardization and quality control, network members do not operate under the HearUSA name. Their association is used

Deafening Demand

Significant growth in

with hearing loss, 30 percent can't afford to purchase hearing aids. Historically, managed care and insurance have been little help.

Today, 80 percent of all hearing aid purchases involve no third-party payment, and the payout, when present, is only onethird of the purchase price, which averages $1 ,800 per aid (with most people needing two aids).

Once with zero coverage, Medicare HMOs slowly began adding hearing benefits in the mid-1990s and the shift continues to gain momentum. The growing concern of managed care providers and politicians is largely due to the fact that sufferers are now in the workforce, thus heightening the acceptability of hearing loss as a medical problem rather than an annoyance. Hearing aids have evolved past luxury items and are beginning to be viewed as medical necessities.

While the Hearing Aid Assistance Tax Credit Act is under consideration in

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Network

The Company's second operating segment is a network business of 1,400 audiologists, making it the largest independent audiology network in the United States.

Members pay to belong to HearUSA's network with the hope t hey will be sent 80 / Val ue Rich Magazine Wrn

r 2005

nationwide hearing loss has meant burgeoning business for the $2.8 billion hearing care industry and its providers. When HearUSA went into business, the first-time hearing aid wearer was 78. Now that figure has dropped to 67 and is expected to decline to 60 in the upcoming years due to increased exposure to excessively loud noise prevalent in modern-day society.

One in every ten Americans has hearing loss, and a staggering 15 percent of current college graduates have a loss equivalent to that of their parents. These facts in combination with an ever-increasing life expectancy and the fact that new aids need to be purchased every five years add up to extraordinary future growth prospects.

Despite America's annual purchase of approximately two million hearing aids, the market is far from saturated. One of the main reasons is cost. Of the 28 million people

immediate boost to HearUSA's revenue will likely come as a result of the new Medicare Prescription Drug Improvement and Modernization Act that President Bush signed into law in December 2003. The act gives Medicare HMOs $4.3 billion per year for three years to reduce costs and improve benefits for seniors.

As managed care organizations battle for Medicare members in order to exploit the prescription drug benefit program starting under this law, total Medicare HMO membership is forecast to grow by 9 million in the next two years. If this figure is correct, and HearUSA gets only half the market percent of members it currently has, its managed care business would double.

Additionally, the growth would impact monthly revenue from contracted HMOs without an associated increase in overhead or marketing expenses.

Stock Woes

One might wonder why, with such a successful business strategy, seasoned management team and encouraging market potential, HearUSA has experienced www.valuerichonline.com

tumultuous fluctuations in stock price. Dr. Brown attributes EAR's largest run-up to $75 to several key "mistakes:' When the stock was trading at $8, the Company took in $6 million from a group that included billionaire investor George Soros. Word got out and the stock leapt to $20 within two months.

This elevated price led to a call from the American Stock Exchange asking if the Company wanted to shirk its Bulletin Board trading status and return to AMEX. Within two weeks of listing, the stock went from $20 to $60.

People were starting to take notice and Dr. Brown was booked to appear on CNBC's "Squawk Box" on July 5, 1996. Due to a scheduling mix-up, Brown was on air for a full 16 minutes, a far cry from the one to two minutes typically allotted each featured company. EAR's trading volume on the day of the broadcast was 1.2 million shares. The stock was driven up to $75, a price Dr. Brown will be the first to admit was ludicrous.

None of this was helped by the fact that many of the stockholders were uninformed retail clients of the HearUSA stores who didn't understand valuation. No one seemed to be balking at the stock's overvaluation.

The reality check came in the form of a column by Barron's writer Kate Welling, who raised questions about the Company's valuation and purported sweetheart deals given to certain investors. The stock took a hit and never recovered.

Brown attributes the stock's continued languishing to several factors, including its rocky history and HearUSA's long road to profitability. The Company expects to be in the black for the first time this fiscal year with revenues in excess of $80 million.

Added to this is a lack of public com parables and the small-cap common denominator of an absence of research coverage.

Despite inconsistent and often inappropriate stock valuation, Brown has no interest in taking HearUSA private. With a normal markup of 40 percent in a going private transaction, a purchase price of $2.10 is far less than what he feels the stock will be www.vrexpo.net

worth as the Company continues to grow and perform, and as the market ultimately corrects.

HearUSA is also in an enviable position for a small-cap player because of its lack of immediate capital need. Brown understands all too well the challenge of obtaining financing, and equates banks' conservative lending practices to selling an umbrella when it's sunny out and asking for it back at the first sign of a cloud . Fortunately, the Company has strategically set up a financing agreement with Siemens Hearing Instruments, the world's largest manufacturer of hearing aids. In exchange for agreeing to buy 80 percent of their products from Siemens, HearUSA received a $52 million finance package.

The Road Ahead

With 2004 revenues over $70 million, incredible growth prospects and standing

on the brink of a breakout year, Dr. Brown is enthusiastic about HearUSA's prospects.

"It's much more exciting when you know you're not fighting for survival; you're now working on growth;' he says. "Before, it was trying to make sure you have a building to come to in the morning:' Brown has created a two-pronged strategy to get to a potential sale, or "wedding;' as he calls it, at $1 0/ share. The first initiative is to post two consecutive quarters of profitability, thus establishing sustainability. The Company expects to clear this hurdle during Fiscal 2005. The second part of the strategy is to start telling people what the Company is doing.

HearUSA has begun releasing monthly revenue figures. Since regulations require ongoing continuation of monthly releases

once started, this decision may appear risky to some. Dr. Brown, however, is confident and believes it is essential to the Company's market success.

His goal is for HearUSA to reach $100 million in revenue. With a break-even point of $70 million at that level and $0.50 made on every dollar above break-even, the Company would earn $15 million.

Is Anyone Listening?

Dr. Brown breaks the financial community down into three types of people: phantoms, talkers and producers. Phantoms come out, discuss all the wonderful things they are going to do for a company and then disappear forever. Talkers remain vigilant and bombard a company with every idea, theory and introduction they can come up with, but never seem to get anything done.

Producers are the only ones who generate results. Dr. Brown is looking for producers as HearUSA's financial partners.

"The same way that investment bankers want this company to be a producer;' says Brown, "we, as a company, want the investment banker to be a producer:' Brown suggests that the traditional investment banking stages of writing research reports, getting the stock up and then raising money are no longer the sequential norm. Investment banks are "going to have to make some investments and choose some compani es:' Immediate gratification is harder to come by and, as a result, "investment bankers should be making an investment for the future:' HearUSA is a veteran of the small-cap crusade and has the battle scars to prove it.

However, as the Company stands in the midst of an incredibly exciting and promising time in its life cycle, the issue becomes both how quickly its stock price is going to catch up to reality and which investment banks and institutional investors will be there to reap the rewards. V R Information: Paul A. Brown, M.D., Chairman (561) 478-8770 www.hearusa.com Wtnter 2005 ValueRich Magazine 181

Verilink:

Beating the Broadband Blues Conduct a random poll of business executives and ask them which industries they would least like to have been in at the turn ofthe21''century.

Their responses will invariably include the bubble bu rst victims of technology, Internet and telecommunications.

Unfortunately, companies like Verilink (NASDAQ: VRLK), a broadband access products and services provider, did not have the luxury of avoiding the bubble burst and ensuing telecommunications slump. Founded in 1982, the Company was already firmly entrenched in the industry and a market leader in many of its product segments by Ql 2000, the quarter the telecom and technology music died.

However, in the midst of the crisis, Verilink management made a strategic decision and took the Company on a divergent path from most of its counterparts. As a result, the Company emerged from the other side stronger and better equipped to face the telecom indu stry shifts and do battle on the fierce competitive landscape. As is often BZ I Value Rich Magazine W1nter 2005

the case, success was just a matter of seeing opportunity while others' visions were clouded by fear of failure.

A Turbulent Time After the Millennium celebration was over and there were no significant Y2K events, telecommunications companies continued a celebration of their own. Stocks were flying high and VC funding was still pouring in. Many adopted an unspoken invincible posture. However, much like the fate of Leonardo DiCaprio's character mere days after his Titanic "King of the World " proclamation, telecom was on a course set for disaster.

When the bubble burst, the impact was unprecedented. Even those who had survived "normal" telecom downturns were frantically jettisoning any perceived deadweight and many were closing their doors for good.

Verilink d id not plan to go quietly. They refocused their attention on the lower-end broadband access products which dominated the market and initiated a volume-driven

profitability stance. It soon became clear that this strategy was flawed. Verilink's existing customer base and established reputation made it ripe for developing higher-end and next-generation products and services. The current approach was underutilizing the Company's strengths and placing Verilink in a market position opposite the space occupied by their perceived peers.

Verilink's management and Board of Directors knew it was time to take action and in 2002 called up thei r star pitcher and proven performer, prior CEO/ President, Leigh Belden. Mr. Belden, a co-founder of Verilink, retired in 1999 after occupying the position since the Company's inception in 1982. Retirement quickly became a distant memory, though, as Belden determinedly reclaimed the helm ofVerilink and prepared to lead the Company through the rocky waters ahead.

Belden believed the Company possessed customers and products that could serve as a solid base upon which to rebuild and reinvent itself. This belief was aided by the financial cushions of an existing revenue www.valuerichonline.com

stream and available cash .

His next assessment was not as conventional. Upon viewing the carnage of the telecommunications collapse, Belden decided against paring down in favor of beefing up. In the second half of 2002, Verilink initiated a merger and acquisition strategy intended to grow revenues, reduce costs through consolidation, gain market share with expanded product offerings, and strengthen the Company's position for the high-growth emerging markets in broadband access. Competitors' downsizing initiatives created opportunities for acquisitions of product lines or companies that fit into Verilink's new strategy of becoming the leading provider of nextgeneration broadband access solutions.

Shifting Technology

VoATM VoDSL, VoiP, Telecommunications industry insiders are fluent in its "acronymese;' but for outsiders the next generation in broadband access products and services essentially boils down to simplification, cost-reduction and increased flexibility.

Anyone who remembers the early dialup technology can attest to the strides that have been made in the telecom industry, but there are still miles to go. The most dominant shift is that of the existing circuitswitched network to a packet or converged IP network environment.

Circuit-based services support a wide range of applications with each type of circuit network providing different performance characteristics. A converged network consolidates services into a single infrastructure by putting data, voice, and video on one network. Packet technology, which enables the convergence, breaks sound into tiny digital units called packets, sends them over the network, and reassembles them in the correct order on the receiving end. The benefits are many and include reducing operating cost, increasing flexibility, simplifying IT administration and maintenance, and consolidating IT staff.

While this migration got sidelined during the telecom crisis, its implementation and growth was inevitable. This is what Veri link's new strategy was banking on. They recognized that the slowed momentum was www.vrexpo .n et

•

I

. . CONNECT

VERILINK® VRLK:NASDAQ CONNECT GaryW. Gray Director of Marketing Communications 51 0-771-3354 office gary.gray@verilink.com

a temporary impediment and a singular focus on lower-end products was short-sighted. As a result of their acquisitions, the Company intended to straddle the past, present and future with product offerings that met the needs and exceeded the expectations of all customers, regardless of where they stood in the technology revolution. By developing next generation application and capabilities, Veri link is preparing itselffor the inevitability of progress and the resultant revenue opportunities.

Rebuilding and Reinvention

Verilink's most recent acquisitions of Larscom Incorporated and XEL Communications illustrate their selective

Verilink Corporation 39745 Eureka Drive Newark, CA 94560 www.verilink.com

networks to cost-effectively deliver highspeed data services to Enterprises:' XEL, a February 2004 acquisition, provides a full suite of broadband access solutions and professional services that address the RBOC and ILEC, or telephone service provider markets. Perhaps most significantly, the XEL acquisition added a professional services capability that provides a turnkey solution for the Company's customers. Verilink intends to extend the professional services offering across the various product segments to help customers minimize operational complexity and time to market issues associated with

~V XEL

~A Communications, Inc. ®

LARSC@M consolidation strategy.

Larscom, acquired in July 2004, was a leading provider of high-speed broadband and optical Ethernet access products with a 12 percent market share in lADs, a next generation product. In addition to bringing existing customer relationships and experienced personnel, the acquisition took Verilink into a new market segment and enabled the Company to have complete coverage of small to midsize business applications.

"Larscom's Orion Ethernet over SONET product line takes Verilink into a new highgrowth market segment;' says Belden.

"Optical Ethernet access has quickly become an important part of the broadband access infrastructure as carriers build out their

bundled services.

"Our services offering is a differentiator compared to other access companies and our customers consider this is a key enabler in their deployment of bundled services;' says Belden.

New products and capabilities are not the only tools Verilink is employing in its qu est for growth. The Company is also building an experienced and talented team to lead it to the next level.

Along with Belden's return, in December 2004 Verilink announced the appointment of Timothy Anderson as CFO. Mr. Anderson is a seasoned veteran with 22 years of financial experience and previously served as CFO for Carrier Access, a publicly traded telecommunications company.

The team remains focused on Verilink's strategic direction and is well-equipped Winter 2005 ValueRich Magazine ! 83

Diagram for Typical Verilink VoiP Application

PSTN

Class 5 Switch...___

Voice Gateway'-.....

/ DSLAM

Regional Packet Network

Verilink lAD for Voice and Data

â&#x20AC;˘â&#x20AC;˘

Legend Internet Customer Premises

Voice Only

'-.___./ Central Office Regional Switching Center

to handle the Company once it reaches its corporate objective of $100 million in revenue. Verilink is also strategically positioned to capitalize on the resurgence in telecom predicted in the second half of 2005.

Belden is pleased with Verilink's performance. "We continue to demonstrate significant progress relative to our strategic plan which is to position the Company for growth and market expansion - creating a new Verilink that becomes the provider of choice for next -generation broadband

Data Only liDli:ZI:l

access solutions;' he says.

Time to Make Some Noise

One of the most consistent themes in the small-cap market is that there are very few quiet champions. History, performance and direction gather little fanfare unless companies are willing to become vocal and make people listen.

Verilink is all too aware of this phenomenon. The Company has a 22-year operating history and solid reputation within the telecom industry, but remains

Verilink's 3000 Series lADs are ADSL and SHDSL Voice over DSL (ATM) Integrated Access Devices.

84 1ValueRich Magazi ne Winter 2005

Voice and Data

undiscovered by Wall Street with a stock price hovering around $3. Now that they have emerged from the slump sleeker and stronger, the Company is starting to talk.

Much to their delight, management has realized there is little needforembellishment; the Veri link story sells itself.

Smart investors know that the greatest opportunities for returns exist in the undiscovered companies. The key is not to wait too long after the quiet players sta rt making noise, because then the opportunity will have passed. R

Verilink's 8000 Series lAD is ideal for small- to medium-sized businesses and provide high-quality voice and data service. www. valuerichonline .com

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Got protection for that stock? www. vrexpo .net

If you are an officer of a publicly traded company, an investor or just a typical shareholder, you can now give yourself the protection and liquidity you're looking for - a non-recourse stock loan.

A non-recourse stock loan is a hedge against securities with no personal recourse to you . That's right! You can enjoy the benefits of receiving cash today, based on an unstable, erratically fluctuating asset, with absolutely no liabilities tomorrow. Eureka!

Finally, a way to access capital without putting your credit at risk or jeopardizing your more stable, valuable assets such as real estate, all in the name of acquiring liquidity. It is absolutely one of, if not the best hedging tools in the marketplace today. If this is news to you, well my friends- welcome to another secret of the

Winter 2005 ValueRich Magazine I 87

ultra-wealthy.

When first introduced to the concept of the non-recourse stock loan as a financial professional, I was convinced that someone had been gravely misinformed. Come on, really? Could you imagine, your stock being sufficient enough to collateralize a cash loan all on its own?We're not talking about one of these margin loans that are designed to provide buying power rather than extracting cash. And certainly, not a Variable Forward Sale, which in essence is nothing more than a glorified sale. I'm speaking of a real bona fide loan, where you provide collateral to the lender, cash is rendered with no suggested purpose, the loan is paid back and your assets are returned to you with its appreciated value in tact. Now that's a loan!

We all know the typical hassles of financing. You must first have the appropriate collateral. You then usually have to fill out credit applications and in some cases present a cosigner. Not to mention, once your credit is checked, the entire universe knows that you are seeking some sort of financing - that can be a concern to even the loftiest of us.

Unlike most loans, this transaction doesn't depend on your credit worthiness or income, nor is it reported to any credit bureaus. This is generally a private transaction. Additionally, proceeds of this transaction are not considered income as there is no sale of the asset, and therefore there is no tax consequence attached to receiving these funds.

I quickly came to understand the ongoing benefits of the non-recourse stock loan and nearly became obsessed with the possibilities. Especially as it was apparent that this mechanism is a superb hedging tool and a fresh alternative to the other products and services the market is commonly forced to employ.

For example, depending on the securities pledged, a non-recourse loan can render Loan to Value's (LTV's) as high as 80 percent with interest rates as low as 2.5 percent per annum. How often can you find financing at rates that low? And correct me if I'm wrong, a margin loan, which can bear a "margin call;' is capped at SO percent LTV. Remember, margin loans aren't much of a deal. You receive SO percent LTV (if you're 88 1Value Rich Magazine Winter 2005

lucky); buying power vs. cash is at greater risk; it's subject to margin maintenance requirements and you carry the personal liability. Not to mention, margin securities are generally only eligible for loans when the stock is $S or greater - although a few particular firms will consider specific securities at a $3 price, but at an overall greater cost to the user.

of both . At the end of the day, you own that liability.

Either way, the possibilities of obtaining a cash loan solely utilizing equities as collateral is generally a distant dream for the majority of shareholders who are dependent on the market's usual resources.

What if you own NASDAQ small-cap or bulletin board securities worth $1 .72 per share, or even restricted securities for that

In my opinion, one of the best companies in the business is AmeriFund Capital Finance, LLC (AmeriFund). But don't take my

Proceeds of this transaction are not considered income as there is no sale of the asset, and therefore there is no tax consequence attached to receiving these funds. matter? So now what -

will you be dis-

criminated against for not having "quality" paper? You should have the right and ability, or at the very least the possibility, of pledging your securities for financing. And with the financial instrument we're discussing, chances are your securities will qualify. Now that's a wonderful thing.

So, what's the catch? Actually finding a company that will provide this service can be difficult. Certain types of banking institutions may consider financing your securities, but are guided by Regulation T & U of the Federal Reserve Board (FRB), as are brokerage firms in this respect. Therefore, many banking institutions are also capped at SO percent LTV. And while there are some banking entities which can operate outside of such regulations, in order for them to take your loan inquiry seriously, your stock is expected to be of the highest quality, your credit rating impeccable or a combinatio.n

A Great Non-recourse Resource

word for it, complete your due diligence and see for yourself.

AmeriFund is the brainchild of Jeffrey Spanier. Over the years, this Florida-based financial service firm, located within Boca Raton's prestigious Mizner Park, has established itself as a premier lender in the stock lending industry. Acting in a similar capacity to that of an institutional lender, AmeriFund finances clients on a multitude of exchanges, including the foreign markets.

The strength, size and steady growth of this firm can be attributed to the reputation of the man behind the wheel. Spanier blends a sense of true humility with an air of extreme confidence. It is due to his integrity, and steady hand that AmeriFund has the drive, resources and ability to bring to market an assortment of superior lending products and services.

AmeriFund provides loans on every form of equity ranging from Treasury Securities (Corporate Financing Programs) to Restricted Securities (Affiliate & Non-Affiliate Programs) to your

typical Free Trading Stock. They even offer option conversion programs in addition to an array of other sophisticated lending packages for the savvier investor.

AmeriFund's Multiple Loan Programs Corporate Financing

AmeriFund lends against Corporate Treasury Stock - and the key word here folks, is "lends:' This is an excellent form of financing because it permits the company to raise capital without the "stock coming back to market;' which is an expected occurrence with Reg. S or PIPE type transactions. The common shareholder appreciates this form of fund raising because it demonstrates a level of consciousness and forward thinking on the part of management.

How could it not? When a CEO chooses to use this tool, he or she is making the decision to minimize the use of high interest debt structures and credit lines. They've finally found a way to create new working capital using paper that has no actual value in a transaction that generally won't compromise the stability of the company. LTVs range from between 40 to 80 percent with fixed interest rates as low as 2.5 percent. All of this comes in just one non-recourse financing. What shareholder wouldn't applaud their CEO for this decision?

Restricted Stocks (Various Programs)

AmeriFund provides multiple lending packages to assist principals, managers and other executives of publicly traded companies in leveraging restricted 144 paper as well as options. For an affiliate this is great news. Considering the term "wall paper" is often used to describe the value of restricted securities, receiving LTVs between 40 to 80 percent on stock, which up until this moment was going to be used to decorate someone's living room, I'd say that's great news. Have you seen the color of stock certificates?

But really, why be cash poor when you're paper rich! AmeriFund gives you the ability to access the liquidity of an otherwise illiquid compensation package. Rates vary based on the program, but overall terms are more than fair. You maintain the benefits of the upside while limiting your exposure to market downturn. Be a realist. Programs like this make it possible for you to finally realize your true net worth.

from stock without selling a single share. You can shelter funds from the downside risk of a volatile market while safeguarding the upside appreciation. And the best part, you have the ability to access capital from the same security time and time again tax-free.

AmeriFund lends on aged and free-trading stock of all types and sizes. With the "Traditional Loan" program, you can leverage free trading securities whether its value reflects $.65 or $50 per share. LTVs and interest rates vary depending on the issue, but overall you're looking at a short-term transaction that gives you a bird's-eye view of the marketplace along with alternatives to selling and other hedging strategies.

This is an important hedging tool for the free-trading shareholder, savvy or not. This strategy can make all of the difference in that fatal moment where your positions are declining precipitously due to some unforeseen abnormality in the market. Because nobody wants to sell at a loss- nobody!

Did You Get Yours Yet?

Aged & Free-Trading Securities

Consider the importance of non-recourse financing if you own aged or free-trading securities. I mean, this product is indeed great for corporate financing, and is a lifesaver for restricted stockholders. But there is a distinct difference between those situations and any person who typically holds free trading securities. I know you know what that difference is. You paid for it! Don't you think it's time you protect your investment?

Without any personal risk, you can take yesterday's investment and secure some of your principal and / or profits today. Truth be told, I don't believe you can honestly say that every single investment you've made has gone up - or better yet, has never gone down.

Using the non-recourse stock loan as a financial tool, AmeriFund gives you the ability to lock in profits and extract cash

If you have discovered this hedging tool already, you are indeed ahead of the game.

If you have not, all that can be suggested is that you give this technique serious consideration. All it takes is one controversy, one president, one anomaly that affects the markets and everything that you've ever worked for can become undone in the blink of an eye. Ask yourself, how many stocks were trading above $100 in 1999?

Sure the markets can be an exciting and invigorating game to play- to buy low, sell high, margin here, straddle there. But, the future must be taken seriously, especially if you have a family to which you want to leave a legacy. A non-recourse stock loan is not just advantageous for you, but a gift for those you love because they should never have to destroy all that you've built just to survive.

Every stockholder should consider the non-recourse stock loan. Get yourself one .. . because selling is not an option. VR Information: www.stocklending.com

Ajene Watson is a financial and real estate professional who specializes in the stock lending industry. Mr. Watson serves as a路consultant for AmeriFund Capital Finance.

Winter 2005 Value Rich Magazine I 89

BUILDING VALUE, BUILDING QUALITY OF LIFE How The Robert Mayer Corporation Sees Possibility in the Overlooked Transforming an aging motel, a pitch and putt golf course, a mobile home park and a gas station into oceanfront luxury hotels and a residential resort ...

Seeing a murky pond as a space for luxury condominium housing that showcases the charm and serenity of the environment.

These are two examples of the creativity

and vision of The Robert Mayer Corporation and its innovative approach to real estate development - an approach that has, among other things, ignited the rebirth of Huntington Beach, Calif.

The Robert Mayer Corporation has essentially created its own market by focu sing on overlooked opportunities, where others have failed to see the greater potential. The Company's far-reaching vision and willingness to assume risks is a rare combination that breeds success. Southern California real estate values are legendary, but so are the challenges and risks associated with its development. The Company's creative approach, coupled with its skill and expertise in navigating the complex waters of zoning and entitlement, have led to some of the region's most spectacular developments.

Modest Beginnings

The Great Hall of the Hyatt Regency Resort and Spa at Huntington Beach.

90 I Value Ri ch Magazi ne Winter 2005

The story of The Robert Mayer Corporation dates back over 50 years when Bob Mayer returned home from the Army Air Corp and began a small construction business in burgeoning post-war Los Angeles.

Land was plentiful, and his small company quickly went from residential remodeling projects to apartment buildings, becoming the largest residential, multi-family developer in southern California.

As the Southland grew, so did the Mayer organization building over 25,000 residential units and retail centers all across the region. Over the years, Bob expanded into related businesses including hospitality, banking and finance, and a casino in Las Vegas. By 1980, satisfied with his success, he w as ready to step back from the day-to-day management of 1,000 www. valuerichon Ii ne .com

employees and projects in three states. He sold the company and prepared to retire and enjoy the fruits of his success, or so he thought.

Great Achievement

Bob sold many of his holdings, but kept several parcels, including the 50-acre piece in Huntington Beach, Calif., then a sleepy surf town, that he believed to be undervalued and underutilized.

Bob recognized that Huntington Beach was ready for a renaissance, and his land, located near the pier and adjacent to the faded downtown, could be the catalyst. He partnered with respected industry veteran Steve Bone to bring his vision of a world-class hotel and residential resort along Pacific Coast Highway to life. Retirement for Bob had not lasted long.

Together, Bob and Steve assembled a team of impressive industry leaders, and began a 25-year odyssey of creating what is now simply referred to as "The Waterfront;' consisting of the Hilton Waterfront Beach Resort, the Hyatt Regency Resort and Spa, and a residential community of 183 new homes. This spectacular destination resort and residential community serves

y

' c v IP 路. ,. , I''

I

Opulent spa facilities distinguish the Hyatt Regency Resort and Spa, Huntington Beach.

as the anchor for the city's downtown redevelopment, an enormous success that has established Huntington Beach as a world-class tourist destination. The Hyatt Regency is home to the largest oceanfront

conference facility in California. A third lu xury hotel has been approved for the site, meaning the entire development process for The Waterfront project will likely span 30 years.

Ocean view of the Hyatt Regency Resort and Spa at Huntington Beach. www. vrexpo .net

Winter 2005 Value Rich Magazine 191

The living area of a Huntington Beach Hyatt Regency Resort and Spa suite.

Today, Bob maintains his role as chairman and guides the vision of the Company, while Bone serves as president. He is joined

by Bob's eldest son, Robert (RJ), as vice chairman. Bone and RJ conduct the daily operations of the business and are shaping its vision of tomorrow.

Agile by Design

Robert Mayer 92 1ValueRich Magazine Winter 2005

It is inaccurate to describe The Robert Mayer Corporation as "small," but the Company is deliberately lean, with a dedicated development group comprising some of the industry's brightest minds and most accomplished careers. This structu re gives the Company what Bone describes as "agility:' "We have a flexibility that allows us to act, to make decisions, to make things happen;' he says. "Many larger development firms don't have this luxury, and it is essential in our ability to create opportunities, take risks and turn them into triumphs that benefit everyone:'

"Small in structure" certainly does not mean limited in vision. The Robert Mayer Corporation manages a wide scope of projects - from 3-acre commercial projects to 50-acre oceanfront development to 600acre master-planned projects.

RJ credits the expertise and long tenure of the firm's senior staff with much of the Company's spirited creativity and long-term success. "The level of talent in this office is just truly remarkable, and the average tenure of over ten years speaks volumes about the type of culture that Bob has created here:' This level of experience and expertise, from industry leaders who have eschewed corporate life for the entrepreneurial spirit and creative passion of the corporation, is an important foundation in the Company's success.

Evolving Vision

The Robert Mayer Corporation recognizes that an evolution in the public's priorities www. valu erichon line .com

regarding their homes and lifestyles is underway. "As we reach the outer edge of suburban development, we approach the point of no return in terms of commuting time;' says Bone. "People don't want to spend more than 60 to 90 minutes in traffic each way, and begin to reconsider the suburban ideal of 'a big house and a yard: Quite simply, we are now valuing time over space. Now the option for a luxury condominium, closer to cultural centers, entertainment and especially the office, is much more attractive:' The Robert Mayer Corporation embraces the vision of renewal as Southern California development returns from the outer fringes of the suburbs and re-focuses on its previously developed suburbs and urban centers. But attractive land that is available for development in the region is beyond scarce. The Byzantine entitlement and zoning process for reposition ing land is daunting to most developers. Thanks to its expertise, resources, experience and tenacity, the organization is able to navigate the entitlement process when others don't dare to attempt it. This achievement is partly due to the team's experience and a legacy of success, and partly to adhering to the high standards of bringing the best value and use to the land, mutually benefiting the communities, landowners and builders. The Robert Mayer Corporation, believing that the value is in the land, focuses its business on acquisition and entitlement.

Once complete and approved, the land is sold, or joint ventured with merchant builders for development.

These types of projects revitalize existing neighborhoods, improving quality of life and local commerce. In order to succeed, projects should include both commercial and residential components to create vibrant, flourishing communities.

"We've seen many redevelopment efforts that put attractive new skins on downtown structures and bring in upscale commercial business to create a pedestrian shopping district;' says RJ. "But, the residential element is missing, and housing is the key to the long-term success of these communities:' RJ notes that the Company is not in the high-rise business. "We are not interested in building towers. Yes, development is www.vrexpo .net

An ocean view courtyard at the Hyatt Regency Resort and Spa in Huntington Beach.

going from horizontal to vertical, but to us that means a three- or four-story structure, with parking or retail below and quality housing above. That allows us to add density without detracting from the character of the neighborhood:' Seeking Partnerships

Self-funded throughout most of its long history, The Robert Mayer Corporation now seeks relationships with investment partners

who share a similar approach to creativity, innovation and development analysis. With the land and projects now in escrow, the future appears quite bright for both the team and potential investor partners.

R Information: Steve Bone or RJ Mayer; (949) 759-8091

660 Newport Center Drive, Ste 1050 Newport Beach, CA 92660.

The Hilton Waterfront Beach Resort in Huntington Beach.

Winter 2005 Value Rich Magazine 193

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Information is subject to change without notice. This is not an offer for extension of credit or a commitme nt to lend. Borrower has option to make interest only ·payments. All calcu lation s are approximate. All rates, fee s and programs are subject to change and/ or withdrawa ls from the market without notice. Qualifications are subject to avai lab le Collateral, credit income, assets and a first position deed of trust. U.S. properties only. Permanents residents only. Non-permanent residents are subject to investor req uirements. A Zero down payment option is also avai lable with certain restrictions. Ask for details. *Interest-only payments for the first 10 years, plus 15 years fully-amortized, for a tota l of 25 years. The above figures are based on a 20% down payment and rate of 3.250 o/o and 1.00% loan discount fee as of 9-09-04. APR is 3.438%. Initial interest-on ly payments of 2,708 per month for 10 years and adjustable fully-amortized payments of 7,026.69 for 15 years based on rate as of 09-09-04. Actual adjustable fully-amortized payments will be based on rate when 10- year interest only period expires. ** Eligible Pledged Assets Securities includ e but are not limited to: Stocks, Mutual Funds, Bills, Notes, Bonds, Certificates of Deposit, Money Market fund s and Ca sh.

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The

New Face of

i ant ro

By Liza Grant Smith

Volunteers get ready to kick off a day of service as part of the Timberland Community Builders Tour.

With the "greed is good" mindset of the eighties behind us, philanthropy has taken center stage in Corporate America.

If your company isn't capitalizing on this concept, you may be missing one of the strongest and most important strategic tools in your business arsenal.

The most stirring stories of charity typically center on selfless acts of generosity.

To relegate philanthropy solely to a passive recipient role, however, is to underestimate t he force it has become in today's society.

The examination of philanthropy as a tool does not undermine its altruistic foundation, 96 1Value Rich Magazine Winter 2005

but rather amplifies the immense reciprocal benefits it provides individuals, communities and corporations. As companies become more sensitized to social, environmental and political issues, they have begun to realize that philanthropic efforts are an important way of defining themselves to everyone with whom they interact.

Aligning companies with a cause or set of values goes beyond a short-term boost to revenue. It is a long-term strategic practice with enduring impacts on everything from customer relationships and loyalty, employee morale and brand image to overall business

health.

The prevalence of strategic philanthropy in today's business world attests to its powerful benefits. What was once a lowertier priority has become a hot-button topic for everyone from mom-and-pop shops to billion-dollar corporations, and they're utilizing it in increasingly innovative ways.

Welcome to the new face of philanthropy.

Cause and Effect Since when does eating yogurt help cure cancer? Yoplait's Save lids to Save lives program, which makes a $.10 donation www. valuericho nl ine.com

to the Susan G. Komen Breast Cancer Foundation for every pink lid consumers send in, is just one of an overwhelming number of cause-related marketing (CRM) initiatives populating the marketplace. A recent lEG Sponsorship Report estimates that companies will spend nearly $1 billion on CRM campaigns in 2004 alone.

Cause-related marketing involves the strategic marriage of one or more of a company's products or services with a public cause to create a mutua lly beneficial outcome for both the business and the cha rity. While companies were once content with quick-hit initiatives such as coupon drops, they are now pursuing longer-term strategic alliances with causes to provide a myriad of benefits.

The primary goal of CRM programs is not to improve the bottom line through heightened sales, as was traditionally the case. According to a 2000 Cone/ Roper study of executive attitudes, only 50 percent of the executives surveyed cited increasing sales as a major reason for initiating cause-related programs. The true goals are the long-term impacts on profitability and cost savings attributed to the changes re sulting from effective CRM partnerships.

By engaging in cause-related

bottom line. In addition to increasing the credibility of a company's marketing effort, CRM gives consumers a convenient way to contribute to nonprofit organizations through their purchasing decisions.

One of the first successful CRM campaigns in the public eye was spearheaded by two guys from Vermont who took a $5 correspondence course in making ice cream and started a business with a $12,000 investment. Ben & Jerry's, which eventually grew into a multimillion-dollar corporation before being acquired by Unilever, forever redefined the way America viewed ice cream.

The company prided itself on taking a public stance on a myriad of social and environmental issues and surprised many by announcing that it would donate 7.5 percent of its pre-tax profits to philanthropy.

Additionally, a portion of the sale of certain flavors went to specific causes, and the company was the first to launch the EcoPint, which utilized environmentally friendly unbleached paperboard .

Ben & Jerry's asked consumers to view the purchase of ice cream as an opportunity to support a cause rather than just a way to satisfy a sweet tooth. The response was overwhelming.

"Our experience has shown tha t you don't have to sacrifice social involvement to maximize profits. They build on each other;' says Ben & Jerry's public relations director, Chrystie Heimert. "The more we actualize our commitment to social change through our business activities, the more loyal customers we attract and the more profitable we become:' Employee Benefits

It is often said that employees are the most important asset of any organization .

Unfortunately, the recruitment and retention of employees is becoming increasingly challenging as the employment marketplace becomes more competitive. This is one of the items driving the growth of employee volunteer programs.

While strategic philanthropy is mutually beneficial for both the corporation and cause, incorporating employee volunteer programs adds another dimension of benefits, this one to individual employees.

Employee involvement in charitable endeavors is directly linked to increased job satisfaction. The interaction with others and the fulfillment it affords go a long way to increasing both self-efficacy and self-worth.

Volunteering is also a way for emp loyees

I1===~~~~~~

marketing,companiesemploy a powerful relationship management tool. Studies have shown that, given equal price and quality, the vast majority of consumers would switch to a brand or company associated with a social issue. CRM appeals to customers on the basis of more than a product; it a/lows them to feel a deeper connection with a company through its values. This may be why 93 percent of executives in the Cone/ Roper survey identified building relationships as the main reason to engage in CRM. Cause-related marketing activities also aid in the quest for product and service differentiat ion in today's crowded marketplace. This distinctive version of brand advertising allows consumers to impact something other than just a company's www. vrexpo .net

On January 27th I will rock the vote I will not be too busy I will not get caught up with other things I will not just forget" I afFirm this oath With each delicious bite will vote!

On January 27th- I,

Ben & Jerry's were pioneers in developing successful cause-related marketing campaigns.

Winter 2005 ValueRich Maga zine 197

Timberland CEO Jeffrey Swartz (right) pitches in on an urban beautification project.

to develop skill areas including project management, communication, teamwork and planning.

Corpo ra tions instituting employee volunteer programs attain their own benefits, not the least of which is a boost in employee morale. This translates into a more cohesive, motivated workforce and reduced operating costs, specifically in relation to HR recruitment and crisis management. In terms of public perception, employee volunteer activities serve to improve both a company's reputation and its public image.

One company that has embraced the concept of employee volunteerism is apparel and footwear manufacturer Timberland (NYSE: TBL). During the 1990s, the company launched its Path of ServiceTM program that p rovides every Timberland employee 40 hours paid leave each year for community service. Additionally, for two days each year, Serv-a-Palooza and Earth Day, Timberland shuts down operations to serve together as a company, engaging between 4,000 and 5, 000 people globally.

"Service provides huge benefits in teamwork and the ability to get to know people across the company," says Ken Pucker, Timberland 's COO. "It breaks the corporate hierarchy, which is critical and otherwise tough to do. It helps people see their managers as real people. It offers managers a way of seeing new potential in their employees:' 98 1ValueRich Maga zi ne Winter 2005

Patrick Kirby, manager of the company's Social Enterprise Department, suggests that Timberland sees volunteerism as a process, not an event. "Employees know that in planning these projects or utilizing their available 40 hours of paid time to serve in the community, it is really about the journey as much as it is about the results at the end of the day;' says Kirby. "I do believe it feeds the soul of ou r people and calls forth a higher level of leadership and commitment.

This leadership does not go away when it's time to sell footwear and apparel. Once it is galvanized, it takes on a life of its own :'

involves volunteering. Rotary, which will celebrate its 1OOth anniversary this year, is one of the world's largest international volunteer service organizations. The group is made up of business and professional leaders seeking to better their communities and support worldwide initiatives through humanitarian service. There's no question that the time and money generated by the 1.2 million Rotary club members make a significant impact. Their accomplishments include no less than being instrumental in eliminating polio as an epidemic worldwide.

In addition to promoting high ethical standards, Rotary also provides its members with networking opportunities whose depth and breadth overshadow those generated by conventional networking methods.

"Working on community projects together or attending weekly Rotary meetings gives members a chance to experience the fellowship and camaraderie Rotary is famous for," says Rotary International General Secretary Edwin Futa.

"While Rotary's emphasis will always be on volunteer service, whenever business people get together, ideas are exchanged, experiences are shared, and contacts are made:' The skills and personality of individuals are highlighted as they work together on the philanthropic endeavors. There is also a

A New Dimension of Networking

Anyone active in the business world in the past decade knows how old-school networking organizations work. You pay a fee and, once a month, enjoy a rubberchicken lunch in a local hotel 's meeting room with a group of business professionals.

Everyone sits around extolling the virtues of their companies and strategically pumping each other for any possible contacts or leads. Unfortunately, participants often leave the lunch knowing little more useful information than a person's name written on a name tag. These types of organizations are often inefficient - and, frankly, so fiveminutes-ago.

While certainly not new to professionals, Rotary International is a prime example of an additional dimension to networking that

Rotarians enjoy valuable civic connections. www. valuerichonl ine .com

Rotary's Annual International Convention attracts dedicated business people from over 160 countries around the world.

personal connection that helps encourage trust. This trust is the foundation of a solid networking relationship.

For companies without a structured employee volunteer program, groups like Rotary can be a good way to develop many of the same advantageous employee core competencies and boost job satisfaction.

Community: A Critical Business Investment

Most company executives would agree that operating in a rundown factory or utilizing defective equipment would be an inefficient and unintelligent way to run a bus iness. What they sometimes fail to realize, however, is that neglecting the health of the community around them is

just as detrimental.

The prosperity of local businesses and the local community are interdependent.

There is no distance between businesses and social problems if the issues have a negative impact on the community; these problems find a way to seep into corporate initiatives. For instance, if a community has an escalating drug problem, chances are that some of this will find its way into the workplace and there may be a greater incidence of companies targeted for crime to support drug habits.

One of the biggest challenges related to community investing is moving beyond a responsive role to proactively identify and rectify issues. An inspiring example of this can be found at Place of Hope in Palm Beach

Place of Hope's Angels of Charity Administrative and Community Outreach Center. www.vrexpo.net

Gardens, Fla. Tom and Donna Mullins, a senior pastor and hi s wife, were deeply distressed by the state of the foster care system. With Florida's average monthly foster care population near 16,000 and approximately 100 children removed from their homes each month in their own Palm Beach County, it was clear the system was overcrowded and overwhelmed.

In the face of these staggering stat istics, the problem seemed insurmountable.

However, the Mullins decided to tackle it on a local level. They asked for support from their congregation and an independent 501 c3 was soon formed. Bud and Marla Paxson of Palm Beach, Paxson Communications Corporation (AMEX: PAX), put up th e seed money to buy 10 acres suitable for the envisioned campus, and a skeleton crew of talented, experienced staff, headed by founding Executive Director Charles Bende r, was hired. Bender immediately went to work building Place of Hope and developing a small administrative team.

A team of community volunteers and financial backers, including everyone from pro-athletes to corporate executives t o the homemakers down the street, have donated funds, time and talent to bring the unique concept alive.

This past summer, the $250,000 Angels of Charity Administrative and Community Outreach Center was opened . And today, the campus is more than 70 percent "built out:' An endowment campaign has been created to ensure long-term stability.

Place of Hope is a rare partnership Winter 2005 Value Rich Magazine 199

between a faith-based organization and the state-licensed child welfare system that offers residential care for abused and neglected children with a level of stability, hope, and healing that the state often finds difficult to provide.

Up to six foster children are placed in "family cottages" with t rained live-in family cottage parents. The cottages provide a stable and nurturing environment for children whose lives have been full of suffering and who, without such support, often become liabilities to society by ending up in jail, homeless, or on welfare.

"Society has made an investment in the lives of foster kids with billions of dollars every year going into the child welfare system;' says Bender. "If on the backend, they leave at eighteen and fail miserably, then it is not a good investment.

"If welfare was a corporation and people held stock, they would be tracking it;' he suggests. "But, people in power have not looked at these kids as the investment- so, when they fall off the edge, or the stock tanks, nobody is paying attention. From a business perspective, we have to take a look at places like Place of Hope that are coming at this from a completely different angle and focusing on independent living skills, educational attainment and a loving and st ructured environment so kids can thrive:' The response of the business community has been staggering. Companies and executives throughout the area have donated their time, money and skills. It is this pairing of charitable objectives with business and entrepreneurial acumen that enables Place of Hope to adapt and evolve, a distinguishing facto r from many other charitable organizations that are slowed by bureaucracy and limited innovation.

Place of Hope is currently building its seventh cottage, which will mean a total of 42 beds available for children. They are also in the research and design stage of developing an independent living program for graduates of the foster system who are typically dumped, unassisted, into the real world at age eighteen.

The real accomplishments, however, are the faces behind the figures. Since opening in spring 2001, Place of Hope has cared for a total of 45 child ren, reunited seven 100 I Value Rich Magazine Winter 2005

Place of Hope gives foster children a stable, homelike family environment.

children with their parents, and has seen eight children adopted by loving families.

These early results serve as a testament to the success of the Place of Hope model and the hard work and commitment of the community volunteers, staff and sponsors.

According to Tommy Mayes, managing director of Wachovia Wealth Management in Palm Beach, one of Place of Hope's business suporters, a company's community involvement is more than just the time or money it donates. "Communities look to companies to validate causes and show leadership;' he says. "So as a company we have an obligation to be visible. We may, by no means, be the largest benefactor of a particular organization, yet our involvement brings additional credibility. It serves as both an obligation and an opportunity to have a very positive effect:' Charity Begins At Home

As a rapidly growing number of companies and executives are coming to recognize, philanthropy is no longer merely for the selfless. The new philanthropy is

one of strength rather than passivity, and this increases not only its popularity in the business world but also the gain for charitable causes.

Philanthropic initiatives have become a critical strategic tool for business, which provides expansive recip rocal benefits.

Successfully leveraging this tool can have an enduring positive impact on virtually every aspect critical for a company's success.

Bottom Line: philanthropy isn't just about doing good, it's also about good business sense. VR Information: Ben & Jerry's www.benjerry.com Timberland www.timberland.com Rotary International www.rotary.org Place of Hope www.placeofhope.com Wachovia Corporation www.wachovia.com

For help designing and implementing an employee volunteer program, contact The Center for Corporate Citizenship at Boston College www.bc.edu/ comoratecitizenship www. valuerichonline.com

Palm Beach County is a dynamic location for business expansion an d relocation. The County's premiere quality of .life and excellent weather offers: • Vibrant Economic Grow th • Business Incentives • Infrastructure • Quality Education • Skilled Workforce • Global Communication Infrastructure • The new home of The Scripps Research Institute Florida

For Information, Demographics, Site I Building Research, Assistance and Tours contact:

(561) 835-1008 www.bdb.org The BDB is the "Official Economic Development Organization of Palm Beach County" and Enterprise Florida partner.

International Economic Cooperation In previous contributions to ValueRich, I have asserted my belief that a socialistic philosophy exists in America today which, unless altered, could ultimately inhibit, if not destroy, the free market capital system that has sustained this great country for over 200 years.

We continue to strangle small and medium-size companies with inefficient capital resources and a burden of excess regulations, such as the Sarbanes-Oxley Act. On the other hand, Fannie Mae recently made a $9 billion restatement of earnings. Where was the corporate governance in this case?

Meanwhile, our government is apparently ignoring the broader economic implications of the United States' $3 trillion financial deficit- equal to approximately 30 percent of the nation's annual economic output.

Last year the United States absorbed almost 75 percent of the surplus savings of the entire world . We borrow; the world lends.

We import the world's exports. Germany,

102 1Value Rich Magazine Winter 2005

w ith barely 80,000,000 people, exported more than the United States last year.

Some economists fear interest rates will rise significantly or we could experience an uncontrolled run on the dollar if action is not taken soon. Foreign companies are delisting from our stock exchanges, together with increasing numbers of U.S. companies going private.

U.S. fiscal policy is in shambles. At the very least, our second term CEO, George W., might have considered donating his $30$40 million inaugural tab to the cause. It seems to me our leaders need to address international economic stability and consider a multilateral approach to balancing and restoring the declining U.S. dollar. If we would humble ourselves long enough to assemble a team from around the globe whose interests are aligned with ours, it very well could demonstrate our abi lity to bring capitalism and democracy to the rest of the world.

Ronald D. Hunter is the Chairman and CEO of Standard Management Corporation (Nasdaq:SMAN), a health and financial services holding company.

Instead, we seem more consumed with incarcerating the Martha Stewarts of the world. Martha did chop down the cherry tree, but did nothing to hurt a single shareholder. Her biggest mistake seems to be that she believed in the American dream and the free enterprise system. VR www.sman.com www.ushscorp.com 317-574-6200

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Your Private Island Villa is Waiting Paradise is waiting for you on the west coast of one of the most luxurious islands in the world. Imagine a private villa nestled on a two and a half acre tropical garden, appointed for leisure and sports, and a staff ready to serve every need. This is no dream.

This is Bon Vivant on Barbados island in the Caribbean.

Recognized by The London Times as "one of the most gracious getaways for the wellheeled;' Bon Vivant is a world-class vacation villa located in the renowned Sandy Lane Estates. At Bon Vivant, you'll enjoy colorful sunsets, balmy breezes and the soothing warmth of the Caribbean sun. Barbados' English heritage and tradition will enchant you. The fragrance of frangipani, hibiscus and bougainvillea will surround you.

"Don't bother eating out because every meal here will far exceed your expectations at any fourstar restaurant in the area:' -

Pampered Living & Exquisite Cooking

A Life Of Leisure Stately villa and pool house Bon Vivant will satisfy your needs for leisure or sports. Relax or exercise in the private Jacuzzi or 50-foot swimming pool.

The flood-lit tennis court is perfect for cool evening play. There is an air-conditioned indoor racquetball court, a billiards room, fitness center, five-hole putting green, terrazzo ping-pong table, as well as shuffleboard, basketball, volleyball and badminton courts.

A golf course and the Sandy Lane Hotel are just a short walk away. Here you can relax on the hotel's private beach and enjoy the crystal clear waters of the Caribbean.

Attendants will carry your sun chairs and chaise lounges to and from your favorite spot on the beach. At the Sandy Lane Sports Shop you can arrange to go sailing, wind surfing, snorkeling or scuba diving.

In Barbados there are historical sights to see, excellent shopping, superior dining, outrageous night-clubbing or you can just rest and enjoy the beauty of the coral sand beaches.

104 1ValueRich Magazine Winter 2005

Susan Medinger, Reisterstown, ME

The ten-room main house features five bedrooms decorated with beautiful floral and tropical prints. Each bedroom has its own private bath. Two of the downstairs bathrooms feature both indoor and private open-air showers.

Relax after a day in the sun in the openair coral stone living room under beautiful eaves, perfect for quiet evenings or gracious entertaining. The villa's richly appointed dining room is an elegant setting with fresh island flowers, candlelight and soft music.

The perfect complement to the main house is the guest villa, complete with a living room, dining room and kitchen . Each of its two bedrooms has its own bath with indoor and private, open-air showers. French doors open from the living room to the pool and tennis court.

Overlooking the pool, on the first floor of another cottage, is the romantic "Nest" with its hanging bed and a bathroom containing a large sunken bathtub.

Bon Vivant will spoil you. The 14-member staff include housekeepers, chefs, butlers, maids and gardeners that see to your every need with the well-mannered English charm of Barbados. Tropical fruit and flowers are picked daily on the estate and you will enjoy freshly cooked gourmet delicacies.

Bon Vivant's kitchen staff are equal to those from the finest restau rants in the world . They have trained in many of the top restaurants in the United States, such as TRU in Chicago, Bouley, WD 50, Daniel, White Barn Inn and Nobu. They have worked under some of the best chefs in the world, including: Chef John Folse at the famous Lafitte's Landing in New Orleans, Chef Odette Fada at San Domenico's and Chef Eric Ripert at Le Bernardin's in New York.

The staff has also studied at the famous King Arthur Flour Baking Education Center in Norwich, Vermont, perfecting their skills in baking international pastries, croissants and baguettes. V R Information: David R. Lawson Tel: 301.656.9400 info@bonvivantvilla.com www.valuerichonline .com

Life & Art of Cartoonist Jeff MacNelly:' The art and material selected from MacNelly's archives included editorial cartoons, Shoe and Pluggers strips, and illustrations for Dave Barry columns. Personal effects, memorable quotes, and photos were interspersed

Jeff MacNelly

A Big

By Karen Willson Sitting in Susie MacNelly's living room on the top of a mountain in Virginia, surrounded by the late Jeff MacNelly's artwork, I couldn't help but feel the presence of this remarkable man. But not j ust because the walls were adorned with his humorous Key West paintings, Pulitzer Prize-winning editorial cartoons, and sketches from his immensely popular comic strip 路Shoe. It was the intensity and passion of the individuals I sat with, the team he left behind, that convinced me that MacNelly was no ordinary man.

Since MacNelly's untimely death from cancer in 2000, Susie, his wife; longtime associate Chris Cassatt, and others have been dedicated to preserving Jeff's legacy.

A compilation of Shoe cartoons edited by Susie and Cassatt, Jeff MacNelly's 27 Years of Shoe: World Ends at Ten, Details at Eleven, was released on October 1, 2004. The book not only covers Shoe from its very first episode, 106 1Value Rich Magaz ine Winter 2005

CD@ to Fi II "I am devoting more time to the birdbrains in my comic strip Shoe. I would like to devote less time to the birdbrains on the national and international stage:' -

Jeff MacNelly

but it is also peppered with sketches, personal photos and quotes from Jeff and the people who loved him.

The same day the book was released, the first MacNelly gallery show of its kind opened at Emerson College in Boston: "Mixed Up Media: A Retrospective of the

throughout the gallery, giving the exhibit a personal sense of Jeff and an eye into how he viewed his world.

Joining us for the interview was Philip S. Rosemond, curator and archivist of MacNelly's art, and Cassatt, who lives in Colorado and has continued to be an integral part of the Shoe production team since 1992. Susie, Cassatt, Rosemond and others worked fervently to pull the gallery show together in five months.

"This is a personal show which portrays the spirit of Jeff;' says Rosemond. Susie, who was thrilled with the success of the opening, adds, "everyone who saw it was just dazzled - we hope this will be the first of many MacNelly shows to move across the nation :' Rosemond looks at this show as a "dress rehearsal " for bigger and better shows of MacNelly's work.

So, what was MacNelly really like? We know that with the Chicago Tribune as his flagship paper he was awarded three Pulitzer Prizes for his editorial cartoons. The National Cartoonist Society twice presented him with its highest honor, the Reuben Award (named in honor of the late Rube Goldberg), for his cartoons and his comic strip Shoe. We know that he was a big man, 6 feet 5 inches, who liked to smoke cigars for both rela xation and "crowd control :' (MacNelly is quoted in Cigar Aficionado's March/ April 1999 issue: "To me, it's just relaxing. Half of it is to keep me awake through the endless comic strip drawings. It's not a social thing with me, you know, I like to say it's crowd control. Fire up a cigar and everyone leaves. It's kind of nice:') Susie tells us that Jeff was "phonophobic" -that is, he absolutely hated the telephone.

Susie would screen his calls with strict criteria. The answer to the question "Would they make me laugh?" had to be yes before he would take the call. Otherwise, he used to say that if he had to talk on the phone, "the cartoon factory would shut down:' About MacNelly's talent, Susie felt that "anytime he was doing non-art it was a www. valuerichonline.com

D Jeltâ&#x20AC;˘.onCOrnÂŤ<un k::ltlona. lnc. ltl"t Dl .. dbut~bi'C.T.H.Y.H.&.

While Shoe remains as MacNelly's visible legacy, his wit and groundbreaking editorial cartooning style (below) changed Op Ed pages forever.

CROWN OF Tl-lORNS www. vrexpo .net

waste;' so she took over the day-to-day business. Aside from those duties, she reminisces about drinking coffee in bed together watching the news of the day and being a part of MacNelly's creative process for editorial cartoons. "I was so lucky that I was the person that he could bra instorm with - I became more and more involved.

I call him the 'da Vinci of his day' - there wasn't anything he couldn't do, and he never didn't have an idea for an editorial cartoon :' Rosemond is also in the process of archiving MacNelly's artwork from over three decades. We walked down to the basement of the MacNelly house where he showed me drawers and drawers of art work, with the excitement of a kid opening up Christmas presents. His big job ahead of him is to identify the sketches, and dat e and preserve them. Rosemond recently found Winter 2005 ValueRich Magazine 1107

Mac Nelly loved to spend time painting in Key West, resulting in a series of whimsical oils featuring animals in human roles and vice versa.

108 1Value Rich Magazine Winter 2005

www. valuerichon Iine .com

a cartoon award trophy that no one was aware MacNelly had received . Rosemond laughingly tells us that MacNelly had a typical messy artist's studio with paper stacks all around, however, when anyone asked MacNelly for a particular piece, somehow he knew right where it was.

Cassatt talks about MacNelly's love for anything old -old tools, old cars. "He liked the way things were built before planned obsolescence:' We took a walk to the garage that MacNelly tinkered in and saw the infamous '59 DeSoto that "The Perfessor" in Shoe drives. Actually, the car appeared in the strip long before MacNelly owned its real -life twin .

MacNelly was one of the first cartoonists in the country to go digital. MacNelly refused to accept the computer, but Cassatt was a master at computers and took the tedious part out of doing a daily strip by composing the art and lettering with software. "The computer was the only thing that I was better at than he was;' says Cassatt, "but it was only because he didn't want to be:' Cassatt says he was glad to do the grunt work so that MacNelly could concentrate solely on his art. He saw that MacNelly's artwork blossomed when he didn't have to worry about fitting the art, inking, lettering and such into little boxes.

MacNelly created the comic strip Shoe

MacNelly turned Shoe over to the team of Chris Cassatt, wife Susie MacNelly and Gary Brookins (left to right) in the 1990s so he could devote more time to painting and sculpture.

in 1977. Shoe's eccentric characters were all birds, and included Shoe, the stogiesmoking editor of the Treetops Tattler Tribune; The Perfessor, Cosmo Fish hawk, the overeducated underachiever; and Roz, the waitress with the first-class putdowns. The Shoe strip continues today, although many don't realize that MacNelly handed much of the production over to his team in the early '90s so that he could devote more of his time to painting and sculpting.

Another player on the team is Gary

MacNelly had a tendency to be politically conservative, but never lost sight of the big picture. www. vrexpo .net

Brookin s, who, according to Cassatt, can best replicate MacNelly's illustrative style.

In addition to the Shoe strip, they have continued working together to illustrate Dave Barry's syndicated humor columns.

Cassatt describes the process: "Barry sends the columns to me and I come up with an image; Gary does the illustrations and I format it and send it out:' Cassatt, who is also editorial cartoonist for The Aspen Times, talks about how influential MacNelly was in the world of editorial cartooning : "His worldview impressed me the most. He had a grasp of the big picture; it was amazing to see how things filtered through his mind. He changed editorial cartooning from the Herblock style, which was a vertical panel, to a horizontal panel.

He set a trend in the way people did editorial cartoons. He was way ahead of the curve.

There were a number of editorial cartoonists in that era. They were all darker. It seem s that Jeff inserted a very sophisticated sense of humor.

"Politically, he had a tendency to be more conservative than liberal, but was more of a Libertarian:' What also impressed Cassatt was that MacNelly knew that "mean never worked" in his cartoons and that he had to be clever to change someone's mind. "He was such a giant intellect:' Rosemond adds:"What I ended up calling him was an 'equal opportunity satirist: He loved Ronald Reagan, so he made fun of him Winter 2005 Value Rich Magazine 1109

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27 Years of Shoe includes many of MacNelly's personal photos and unpublished sketches.

110 I ValueRich Magazine Winter 2005

more than any one else- but in a very kind way. I've found literally hundred of cartoons of Reagan from the eight years he was in office:' In the foreword he wrote for 27 years of Shoe, Dave Barry reflects on MacNelly: "The characteristic that I think most distinguished him was that, despite his vast talent, and all the success and honors it brought him, he was a regular guy. He won three Pulitzer Prizes - think about that: three Pulitzer Prizes - and he'd have been a welcome guest at any power salon in Washington .

"But he wasn't interested in the pursuit of status, or any other activity that entailed the wearing of a suit. He was far happier living on a farm with some dogs and various old vehicles in various stages of operability. His choice of companions was based not on who was important, but who was fun to hang out with, and as a result he had an astonishing range of friends, from mechanics to moguls.

He treated these all the same. He was a regular guy, who happened to be a genius:' Looking out the large windows of the house MacNelly and Susie shared, I visualized the artist thinking and creating in such a scenic, peaceful environment, without interruption. Susie laughed when she recounted MacNelly's newsroom stories of people walking by his piled-up desk, watching him picking his feet and thinking he wasn't doing anything. In actuality, he was thinking up ideas for cartoons. When they moved to the Virginia mountains in 1990, the surroundings became a much better fit for the big guy with the great ideas.

A week after the ValueRich interview, I was home sitting on the beach in Florida laughing out loud reading the new Shoe book and suddenly I was pierced with emotion. I had truly felt the sadness of MacNelly's death after briefly touching the lives of those he was closest to. But at the same time, I realized that this team of Jeff's who were so passionately working to keep his legacy alive might not have realized that the legacy was already thriving - I heard and felt it in my own bursts of laughter.

When you view life with a MacNelly twist, it's a treasure not likely to be forgotten . V R www.macnelly.com www.jeff-macnelly.com www.valuerichonline .com

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