EFTA00505807.pdf

Galloway Partners Introduction O.ber.13 v3.0 EFTA00505807 This presentation is for discussion purposes only, for use by its authors and those who have been furnished this information by the authors. This presentation does not constitute an offer or solicitation in any jurisdiction to any person or entity. Offers to sell interests in any fund managed by Galloway Partners or any of its affiliated entities will be made only by way of a separate Private Placement Memorandum (collectively the "PPM") and not by this presentation. A potential investor considering any investment in a fund should read the respective PPM for purposes of making its investment decision. The relevant PPM contains a more complete description of each funds' investment practices, icman..nunz, iim‘z aiiu unici I Lu1J icicvaii tu a uc%.,I lun tu Luvct.. No representations or warranties, express or implied, have been made as to the accuracy or the completeness of the information in this presentation and this presentation should not be relied upon for making an investment decision. 2 EFTA00505808 Contents Executive Summary 4 Market Opportunity 7 Strategy & Execution 12 Track Record: Bruce Galloway 20 Case Studies 22 Investment Targets 25 Appendix 28 3 EFTA00505809 Executive Summary • Galloway Partners ("GP") is a newly established investment management company that specializes in acquiring influential ownership stakes in distressed, small & micro cap companies. GP's strategy is to use an "activist" approach to drive a turnaround in corporate value which will benefit both stakeholders and shareholders of GP's portfolio companies. • GP's primary focus is on US-listed companies which are in the Tech/Telcom, Natural Resources, Consumer Retail, Healthcare Services and Business Services sectors. GP's target return is 2-5x on invested capital over a 2-4 year investment horizon. • Due to a unique confluence of events, valuations for many small and micro cap companies have been pushed to distressed levels. Market inefficiencies are at an all-time high due to a dramatic reduction in the number of buy-side and sell-side participants in the Small and Micro cap space. As a result, GP believes that current market conditions are ripe for producing once-in-a-generation returns. • Co-founded and controlled by Bruce Galloway, GP is uniquely positioned to capitalize on the current market opportunity. Bruce Galloway has over 25 years of experience researching and investing in the Small and Micro cap sector. In addition to being recognized as one of the industry's leading investors, he has an unparalleled network of contacts and relationships to help source and assess potential investments. • GP has identified several initial investments which meet its investment requirements. GP is seeking to raise US$50-100 million in a first closing for a new hedge find ("Strategic Opportunities Fund") which will invest in Small and Micro caps. GP intends to transfer all control stakes to a newly formed investment holding company ("LISTCO") and file a registration statement in order to affect a public listing of LISTCO's shares. 4 EFTA00505810 Executive Summary - Indicative Term Sheet Issuer Strategic Turnaround Fund, LP Security Description Series A Exchangeable Redeemable Preferred Shares Dividend Rate [4%, payable in cash or in-kind] Maturity Date [5] years from Closing Issue Price USS[10,000] per share Issue Size US$50,000,000-100,000,000 Closing Date [November 30" 2013] Exchange Series A Preferred exchangeable at any time after a Qualified Listing Voting Rights Each share of Preferred stock will have the right to a number of votes equal to the number of shares of Class A common stock issuable upon conversion of each share of preferred stock Protective Provisions Consent of the holders of at least 50.1% of the Series A Preferred will be required to: • Alter any provision of the articles of incorporation or the bylaws; • Approve any transaction or series of transaction deemed to be a liquidation of the Company; • Approve any related party transactions; • Approve any merger or other corporate reorganization; • Declare or pay any dividend or distribution or approve any repurchase with respect to the Preferred or Common stock. lin cstor Rights • Maintain proportionate ownership; • Right of First Refusal; • Co-Sale Rights; • Drag-Along Rights 5 EFTA00505811 Executive Summary — Organizational Structure Galloway Partners (Mgmt Co) Bruce Galloway (Chairman & CEO) Eugene Kim (COO) Operation: Galloway Holdings (LISTCO) I mani Investments Control stakes transferred to LISTCO, which will be a publicly traded holding company • Standard 2%I20% management fees paid by LISTCO ("GH") and Hedge Fund to the Mgmt Co. • Additional 10% Incentive Fee of Net Appreciation which exceeds 2.5x return of • Mgmt Co. is owned by Galloway and Kim • Galloway Holdings is a [C-corp] established in [Delaware] • Preferred Shares will be exchangeable into LISTCO shares 6 EFTA00505812 Market Opportunity EQUITY MARKET CAPITALIZATION (USS billions) Saudi Arabia Singapore Mexico Russian Federation Korea Hong Kong SAR, China Brazil India US (Small & Micro Cap + OTC) China • Equity Market Capitaliza SOO 1,000 1,500 2,000 2,500 3,000 3,500 4,000 China US (Small &Mic ro Cap + OTC) India Brazil Hong Kong SAR, China Korea Russian Federatio in Mexico Singapore Saudi Arabia ion 3,697 3,354 1,263 1,230 1,108 1,180 875 525 414 373 At approximately US$3.3 trillion, the combined market capitalization of exchange-traded US Small & Micro Caps and OTC equities is comparable in size with the largest emerging market stock markets, but with significantly better trading liquidity, transparency and regulation Source: World Bank and (Data as of December 31, 2012) 7 EFTA00505813 Market Opportunity US Equity Market Composition • Large Cap • Mid Cap 3% Small Cap • Micro 1% hi Ultra Micro OTC QX The Beet Marketplace with Chia Idled Companies The OTCOXC -aneblace errs die rev .niorneit and not Odor,. easing U S. and global condone. To qualty hot no OiCOX,arkontam, com0anos mustnootngn loan., standards. Oa unem n mar thSCIOS.,re. and be SCOnSC, ed by a or.asonal nrdIsartyachisor. Designer, br ine most reuua0le. igiod and onsuor.tnencly co-orses. OTCOX ~es rat elves:ash.. the informants necessary is notigenny an lyre. value and nada tied mantes cYrr. kJ •-• The Venture Stage Marketplace with Currant U.S. Reposing Companies ne OnCe, natketOla“. OR, Wort. Itiong br secur sea t , railer of deinnogN convenes real are tepottnopouS took.tato, (sEcre.... or Murat.). Sacs 000,70 nas no trimmer, inanoal standards r. otit.des shells and penny docks nal ate Current el toes dICICYLle b toit,t,a,.• loo 01COS,VROVa. nas anomvoh roo.00 to Fti RA °domed OTC Whom Mora 1010881 as no swats 00.1,4.. lot SEC and bank reporIN securaes two-Ma on Sr. exchanges arf3Pink The Open Marketplace with Variable Reposing Companies the OTC PistS vheUlaoe eters tradng is wade roectirn of cowry seoxst.111,0.911 any broker. Inn rrylaiggi.00 y tot an to. Of 0,tylve$1,4: 0/0 nen, al reasons or dehirs damns 0r riesdihrdinti atm., hey re tumor 9.0.1090,Zad by no Ineb of etternabon mat !telt:m.o. • Combined market capitalization of exchange-traded Small & Micro Cap stocks is approximately US$2.1 trillion. OTC securities have a combined market cap of US$1.3 trillion • OTC securities are bought and sold through brokers in a manner similar to that of NYSE or NASDAQ-listed securities • There are approximately 10,000 OTC securities. Total OTC daily trading volume currently exceeds US$750 billion Source and Math as of December 31. 2012) 8 EFTA00505814 Market Opportunity "A Perfect Storm" Increased Regulation • Increased capital requirements and costs of compliance has forced many of the traditional broker-dealers in the sector to merge or close • FINRA is aggressively cracking down on market misconduct and raising the standards for issuers Redemptions • Market collapse due to the Credit Crisis of 2007-8 led to a wave of hedge funds, which specialized in the sector, shutting down • Fund flows out of the sector resulted in forced liquidation of positions into a market with no new buyers • Clearinghouses unwilling to take in OTC securities • Limited research coverage • Reputational concerns Source: Company data • Stocks of many lower ranked Small & Micro Caps remain at or near all- time lows • Valuations are compelling • Very few experienced players in the sector remaining 9 EFTA00505815 Market Opportunity Limited Competition RIP Selhide Buyside Rodman & Renshaw Willowcreek First Montauk Laurus First Tennessee Vision Capital V Finance Special Situations Gleecher Barron Partners Think Equities Yorkville Pali Capital Trinad Morgan Joseph Merriman Curham GTAX Jessup & Lamont Empire Capital Rochdales Securities • The winnowing of broker-dealers which were active in the Small & Mid Cap sector has dramatically altered the competitive landscape • Hedge fund participation is virtually not existent. Position sizes of large funds are too large for the sector and most of the smaller, dedicated funds have shut down due to poor performance • Traditional long-only funds are constrained by restrictions on buying shares trading below US$1.00 and/or owning shares with small floats and limited daily trading volumes • No true Micro Cap ETFs Due to the sharp reduction in market participants, there are very few ways to get exposure to the most attractive small and micro cap names 10 EFTA00505816 Market Opportunity Ideal point in the cycle Current Market Growth (2011-2015 Distressed (2007-2008) Recapitalization (2009-2010) r•F-- US economic growth expected to lea all developed markets • Monetary policy remains extremely accommodative • Low interest rates spurring increased risk appetite • Liquidity is beginning to move out of Mid-Large Caps. Small & Micro Cap valuations remain compelling relative to larger caps which have already recovered to pre-Lehman levels Markets no longer punishing "bad" news Expect favorable momentum to be supportive for the next 2-4 years 11 EFTA00505817 Strategy & Execution Turnaround • Fundamental Valuation Catalyst Metrics • Financial Analysis • Historical Highs • Management Change • Industry Dynamics • Asset Value • Financial Recapitalization • Economic Conditions • Macro Environment • Competitive Landscape • Industry/Product cycle change Distressed Growth Valuation Potential • Investment strategy is focused on "turnaround" candidates which have been forgotten by the market • Utilize an Activist Approach to expedite implementation of changes and ensure smooth execution • Avoid potential financial restructurings and development stage companies • "Real Companies" with tangible assets and substantial revenue 12 EFTA00505818 Strategy & Execution 13D Filing Publicly announce GP's plan for improving shareholder value ws- Engage Board Issue list of specific actions to be implemented by the Board Appeal to Shareholders In the event the Board is unwilling to execute the Plan, need to initiate a proxy battle in order to take control of the company Utilize an Activist approach in order to maximize the value of investments Short-Term Asset Sales Special Dividend Medium Term Board Changes Management Replacement Maximize Shareholder Value Jong-Tenn Share Buy-Back Capital Structure Dividend Rate • Of the US$85 billion in "Activist" hedge fund assets, none are focused on the Small & Micro cap sector • Activism has been shown to improve shareholder returns by over 16%") ( I) - Wall Street: Back to Basics- by Alex Gavrish. Chapter 4 13 EFTA00505819 Strategy & Execution Management Shareholder Activism Capital Structure Technology Market Psychology Turnaround Catalysts Geopolitical Value Maximization Key changes which GP focuses on as Turnaround Catalysts for the revaluation of a company's shares 14 EFTA00505820 Strategy si Execution Russell Investments Microcap Indexes Performance 350 300 250 200 150 100 so 0 cfP cridg' vsk dr co e ,ss.% do• rt. 1. 'V rt. 11. 'V "t• 11. t•Micro index M -Value Russell Microcap Value Index (M-Value) Russell Microcap Growth Index (M-Growth) Bloomberg ticker symbo RMICROV Bloomberg ticker symool RMICROG Reuters ticker symbol Reuters boar symbol Weighted average mantra cap (SB) 0.357 Weighted average market cap (58) 0 428 Median market Cap (5B) 0.194 Median market cap (58) 0.184 Largest company by market cap (SB) 1.200 Largest company by market cap (SB) 1 200 Characteristics Characteristics Pncefficok 1.26 Price/gook 3.65 0mdend yield 1.83 Dividend yield 0.48 Price/Earnings (ex-negative cantles) 15.89 Price/Earnings (ex-negatve earnings) 22.09 IBES long-term (vowel forecast (%) 12.00 IBES long-term growth forecast (%) 17.47 EPS 5-year growth 8.79 EPS 5-year qty,th 14 33 Within the Microcap sector, Value stocks have consistently outperformed Growth stocks in both up and down markets Source: (Index data as of August 3). 20)3) 15 EFTA00505821 Strategy & Execution Clearly defined and historically successful Investment Process Screening Due Diligence Execution Monitoring Exit • "Bottoms-Up" • Financial • Negotiations • Board/Mgmt role • Approach Analysis with • Regular • Block Sale • Pending • Scenario stakeholders Reporting • Market Sell- Catalysts/News Analysis • Legal, Tax & requirements Down • Fundamental Metrics: • Business Risk Assessment Compliance sign-off • Management Updates  EV/Book Value  Revenue/EV • Supply Chain Verification • Trading strategy • Tracking to Operational Plan  Discount to Historical • Industry Outlook • Hedging Requirements • Management meetings • STEP-score • Competition • Settlement • Financial Review • Proprietary network • Analysis Corporate Procedures • Assist with Investor • Recent Trading Range & History • • Governance & Legal Review Management meetings Site Visit • Communications Participate in discussions with stakeholders such as creditors or labor 16 EFTA00505822 Strategy & Execution TechiTelec om Healthcare Services Value Business Services Natural Resources Consumer Retail • GP's core investment universe consists of approximately 500-1,000 companies across five key sectors, which collectively represent approximately 50% of the total market cap in the small and micro cap sector • Median market cap of GP's target companies is approximately US$75 million and max is US$1,200 billion. Many of the target companies are former Midcap companies which have been sold down so much that they now classify as Micro and Nano caps • Typically target companies will have been trading at historically low valuations for close to 36-60 months already 17 EFTA00505823 Strategy & Execution A Share Price • Sharp share price decline nom Highs • Forced tilling I • No Sell Side coverage • Limited trading Entry point (x) • Change catalyst+ • Ntornentum implementral t Buyers • Improvement GroxM • Sell Side visible in t coverage quarterly return,: pawls First Exit (2x) r Time 12-24 months 4 4 9-12 months 44 12-36 months Complete Exit (5-I0x) • By focusing on "forgotten" companies which trade at historical lows, GP can obtain maximum influence while experiencing minimal disruption to share price while building the position • Exiting in Growth Phase provides for optimal profit maximization. The typical investment holding period is between 2-4 years 18 EFTA00505824 Strategy & Execution Investment Buckets 10% 8% 2% a Deep, Deep Value 'Turnaround" a Financial Engineering High Growth/ International ■ Hedges *II Hedges : High Growth/International . Financial Engineering Deep, Deep Value "Turnaround" Investment Horizon ■ Minimum ■ Maximum 0 10 20 30 40 50 60 (months) • Although Deep Value, Turnaround investments will represent the main focus of the portfolio, GP does make shorter-term opportunistic investments • Financial Engineering plays include pre-IPO financings, bridge equity, mezzanine investments, etc. • High Growth companies and/or non- US investments will collectively make up less than 10% of the portfolio • As a hedge against any sudden, major capital markets meltdown (i.e. Daily drop in major equity indexes of >5%), GP uses deep, out-of-the-money puts and/or CDS • Little to no leverage will be used 19 EFTA00505825 Track Record: Bruce Galloway Proven track record of successful investing: 20+% annual returns over past 15 years Present 1983 2005-2013 1994-2005 "'Galloway Ca it RT OBurnhain- .........----1 nagement Securities (MD) (CE (CEO) • ag Man ed US$25 'MBA Stern Business 1979 School conomics BA Hobart Williams Smith College •Managed US$100 mil in assets •Published research on distressed companies •Led several corporate finance transactions mil turnaround fund (STEP fund) OGALLO A ERS • 26+ years of Small & Micro cap experience • Second to none investment track record • Unparalleled network of relationships • Extensive experience with turnarounds, activist investing and "bear" markets 20 EFTA00505826 Track Record: Bruce Galloway STEP Fund Personal Account Year =500 Russell 2000 Dow Jones Galloway 2009 13.44% 19.46% 7.50% 41.46% 2008 -38.49% -34.80% -33.84% -63.46% 2007 3.53% -2.75% 6.43% -34.81% 2006 13.62% 17.00% 16.29% 42.42% r2 -005 3.00% 45.37% -0.61%IMr-31.75% 2004 8.99% -21.58% 3.15% 39.99% 2003 26.38% 45.37% 25.32% 83.24% 2002 -23.37% -21.58% -16.76% -36.99% 2001 -13.04% 1.03% -7.10% 56.33% 2000 -10.14% -4.20% -6.17% -58.95% 1999 19.53% 19.62% 25.22% 904.63% 1998 26.67% -0.35% 16.10% -33.47% 1997 31.01% 20.52% 22.64% 117.37% 1996 20.26% 14.76% 26.01% -8.36% 1995 34.11% 26.21% 33.45% 98.78% 1994 -1.54% -3.18% 2.14% -18.87% 1993 7.06% 17.00% 13.72% 167.06% Cumulative 235.18% 269.96% 285.80% 3778.52% Avg. Annual 5.16% 6.02% 6.37% 23.82% Selected Investment Hi • hli • hts 1. Command Security (MOC) - 2002 • Entry Price: $0.60 • Exit Price: $3.20 • Cumulative Return: 350% • Exit: 2009 2. Radnet (RGX/RDNT) — 2004 • Entry Price: $3.00 • Exit Price: $13.00 • Cumulative Return: 300% • Exit: 2005 3. Seitel (SITL) - 2005 • Entry Price: $0.24 • Exit Price: $4.60 • Cumulative Return: 2000% • Exit: 2007 Note: All performance numbers am audited and available upon request. STEP fund wont into liquidation mode in 2010. Perfomrance for 2010-present is estimated to be approximately 30% per annum 21 EFTA00505827 Case Studies: Command Security MOM Initial Entry /IX; $12Wee Acquire controlling block 2007 r A +1\ 2004 200? 2022 \[\ Replaced Board of Directors Took over as Chairman Brought in Rudy Guiliani Exit Value Creation: • • Took over control of the Board and acted as Chairman in order to institute a plan to enhance the company's reputation Leverage network of relationships to bring in Rudy Guliani to lend credibility to the company's turnaround plan Company Profile: • Command Security is a provider of contract security services with over 30 years of experience and 6,000 personnel. • The company provides armed and unarmed security personnel to governments, companies, schools and residential/commercial buildings as well as customer service personnel for airlines Key Investment Considerations: • US$72 mil. of annual revenue at time of investment (trading at over 12x Revenue/Market Cap.) • Favorable industry dynamics post-9/11 • Over 4x return on investment Source: and company reports 22 EFTA00505828 Case Studies: Radiologix/RadNet (RU! Merger closing Value Creation: !Tx: sRrsis 206 203? Feb Ow Jn Ad RDNTI Company Profile: AA Sco Oct Not Doc 20:8 Fa Mu SID 60 5$ SG SC • Immediately prior to being acquired by RadNet in November 2006, Radiologix had merged with Primedic. • The resulting combination created the largest independent provider of diagnostic imaging services in the US. • In addition to providing imaging services such as MRI, CT, PET, etc., it also provides administrative management, and information services to radiology practices. Key Investment Considerations: • Advocated for merger or sale of the company • Utilized SEC filings to exert pressure • Merger announcement made within 12 months of establishing a position Solidly profitable and cheap valuation (EV/EBITDA) • Industry leading technology and quality management team • 4x return on investment Source: and company reports 23 EFTA00505829 Case Studies: Pier 1 Imports (PIM Jai 13 Doubled Position Value Creation: • In-depth research of operations and store visits • Debt buy-back • Return to operational profitability Company Profile: • A specialty retailer which focuses on the direct importation of decorative home furnishings and gifts which have a high degree of hand craftmanship and uniqueness. • The company operates over 1,000 stores across the US, Canada and Mexico. Key Investment Considerations: • Strong liquidity position with over US$200 million in unencumbered cash • Favorable competitive dynamics due to bankruptcy of leading competitor • Strong profit growth potential with over US$1.0 billion in annual sales • 8x return on investment Source: and company reports 24 EFTA00505830 Investment Targets: Company "A" Y\L 5yr Share Performance 2009 Apr Jul Oct 2010 Apr Jul Oct 2011 Apr Jul Oct 2012 Apr Jul Oct 2013 Apr Jul 30K 20k • A Fortune 500 company which 10K operates in the transportation sector • An industry leader in providing supply-chain solutions. Its network has local, regional, national and international capabilities Company Profile: Turnaround Catalysts: • New management team • Restructuring of labor contract • Return to profitability Selected Financial Metrics: • Market Cap: < US$200 million • Annual Revenue: >US$ 5.0 billion • Cash: > US$150 million • P/E Ratio: N/A • Div. Yield: 0.0% • Down from 5yr High: 99% Investment Targets: Target Return: [5]x Holding Period: [24] months Source: Yahoo Finance ( 1013/2013) and company reports 25 EFTA00505831 Investment Targets: Company "B" 5yr Share Performance I. 2009 Apr Jul Oct 2010 Apt Jul Oct 2011 Apr Jul Oct 2012 Apr Jul Oct 2013 Apr Jul Turnaround Catalysts: Company Profile: A leading provider of renewable fuels that primarily operates in the Western US Vertically integrated operations spanning production, storage and delivery Low-cost provider while demand growth is outpacing supply Selected Financial Metrics: • Market Cap: < US$100 million • Annual Revenue: >US$ 1.0 billion • PIE Ratio: N/A • Div. Yield: 0.0% • Down from 5yr High: 99% Investment Targets: • Forced selling and hyper-dilutive financing has run its course • • Turning cash flow positive Improving industry dynamics Target Return: [5]x Holding Period: [24] months 1 Source: Yahoo Finance (10/3/2013) and company reports 26 EFTA00505832 Investment Targets: Company "C" ylu Company Profile: 5yr Share Performance 70 • • • A leading provider of marine transportation services Listed on NYSE The company has operations 60 around the world 50 3C 20 10 7 4" 2009 Api Jul Oct 2010 Apr ful Oct 2011 Apr Jul Oct 2012 Apr Jul Ott 2013 Apt Jul Turnaround Catalysts: Selected Financial Metrics: • Market Cap: < US$100 million • Annual Revenue: > US$100 million • Asset Value: > US$550 million • PIE Ratio: N/A • Div. Yield: 0.0% • Down from 5yr High: 95% Investment Targets: • Highly leveraged to global economic growth • • Improving industry dynamics Return to positive cash flow Target Return: [5]x Holding Period: [24] months Source: Yahoo Finance ( I 013,20 B) and company reports 27 EFTA00505833 Turnaround Catalysts: Investment Targets: Company "D" Company Profile: • 10yr Share 16 Performance 11 • 12 10 • 6 4 • • 2 2004 2005 2005 2007 2508 2009 2010 2011 2012 2013 E-commerce company which provides cloud-based sales solutions Proprietary technology which enables the Company to service customers of all sizes, ranging from Fortune 500 to small businesses Global reach Selected Financial Metrics: Market Cap: > US$50 million Annual Revenue: < US$100 million • PIE Ratio: N/A • Div. Yield: 0.0% • Down from 10yr High: 99% Investment Targets: • New management team • • Favorable product cycle candidate. Partner with Microsoft Target Return: [ 10)x Holding Period: [36] months 1 Source: Yahoo Finance (1013120B) and company reports 28 EFTA00505834 Investment Targets: Company "E" 5yr Share Performance 2009 Apr Jul Oct 2010 Apr Jul Oct 2011 Apr Jul Oct 2012 Apt Jul Oct 2011 Apr Jul Turnaround Catalysts: te Company Profile: • Designs and manufactures optical components, lasers and 16 communications equipment • The company's products span both the industrial and consumer markets worldwide. • Its products are used in a wide array 10 of applications including bio/medical imaging, robotics, laser printing and telecom networks 6 14 4 2 Selected Financial Metrics: • Market Cap: > US$200 million • Annual Revenue: > US$500 million • P/E Ratio: N/A • Div. Yield: 0.0% • Down from 5yr High: 90% • Turning cash flow positive Investment Targets: • • Rollout of new products opportunities Target Return: [10)x Holding Period: [36] months Source: Yahoo finance (10,3/20B) and company reports 29 EFTA00505835 Appendix: GP Team Profile Bruce Galloway Chairman & CEO Mr. Galloway oversees and manages all aspects of GP's investments. He is a professional portfolio manager with 26 yrs of experience investing and advising small and micro-cap companies. He is widely recognized as a leading investor of turnarounds, deep value small and micro-cap stocks. He has held seats on the Board of numerous companies and implemented turnarounds of several companies. Mr. Galloway graduated from Hobart Williams Smith College in 1979 and received an MBA from NYU Stem School in 1983. Eugene Kim COO Mr. Kim is responsible for GP's operations and finances, including investor relations and legal/compliance. He has over 20 years of experience in the finance industry and most recently was the CFO of a China-based manufacturing company with over US$500 million in annual revenue. His previous experiences include serving as the CIO of a pan-Asian credit hedge fund, an investment banker with ING Barings and Barclays Capital, and as a credit research analyst with UBS and Nomura. Mr. Kim graduated from Yale University in 1992. 30 EFTA00505836 Appendix: Selected Publicly Traded Holding Companies Harbinger RCS Berkshire Leucadia Group Steel Capital Hathaway National Inc. Partners Corp (USS 000s) (BRK.B) (LUK) (HRG) (SPLP) (RCAP) Fiscal Year ended 12/31/2012 12/31/2012 12/31/2012 12/31/2012 12/31/2012 Revenue 162,463 9,194 4,500 761 288 Profit Margin 9.2% 10.9% 1.8% 5.4% 2.6% Total Assets 427,452 9,349 27,400 1,378 62 Book Equity 187,647 6,767 1,599 527 31 Equity Market Cap. 283,800 9,900 1,449 451 457 PIE 16.1x 8.1x 9.4x 54.6 ROE 10.2x 12.8x I4.5x Earnings/Share 10.9 3.38 1.09 0.28 Price/Book 1.5Ix 1.46x 0.9Ix 0.85x 14.74x Div/Yield 0.9% 4.7% Institutional 66.4% 59.8% 85.4% 28.8% 1.0% Ownership BFC Financial GH Corp. (Pro (BFCF) Forma) 12/31/2012 12/31/2013 E 497 500-1,000 4.6% 0-5% 1,414 365 194 100-200 50-100 TBD TBD TBD 10.2% TBD GH figures Pro Forma consolidation of Target Company "A" and US$5O million Pref issuance Source: CNI3C and company reports. Market share price data as of 9/2712013 31 EFTA00505837