smh market & liquidity services
DESCRIPTION
This is a capabilities overview for SMH Market & Liquidity Services. We provide Strategic Shareholder Communication, Trading Support and Equity Spotlight Reports. Visit our website at www.smhmls.com for more information.TRANSCRIPT
OVERVIEW
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Executive Summary
• Facing the liquidity “black hole,” most small cap companies today do not have the kind of attention from Wall Street that has historically financed emerging, high-growth companies.
• By taking on only high-quality, high-growth companies under our MLS service, we intend to become the “go-to” name for information and investment ideas for the small-cap and micro-cap market.
• The right combination of issuer-paid research, trading support and analysis and strategic investor communication is tailored for each specific situation to maximize the value of your public entity.
Visibility. Transparency. Opportunity.
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• Despite having strong fundamentals, illiquidity can act as a gatekeeper to capital even for the most promising small companies.
• Public markets are driven by trading liquidity. Companies with little or no trading activity cannot attract institutional-investor interest.
• The lack of informational liquidity is the other part of the problem.
About 53% of all public companies have market capitalization of less than $125 million and 83% of those lack any research coverage. During the last five years, more than 700 companies have lost research coverage as Wall Street has slowly abandoned small cap companies.
Illiquidity can trump strong fundamentals
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Cubic Energy Inc. retained SMH Market & Liquidity Services on 1/22/08Stock Price $1.67 Volume 14,400 shares
As of 7/31/08Stock Price $4.68Volume 374,900 shares
ZBB Energy Corp. retained SMH Market & Liquidity Services on 2/26/08Stock Price $2.20Volume 28,700 shares
As of 7/31/08Stock Price $3.50Volume 26,400 shares
SMH Market & Liquidity Services – Client Performance Since Engagement
ZBB Energy Corp (AMEX: ZBB)Stock Price & Volume
Stock Price Increase 180% since 1/22/08Volume Increase 253% 3 month Average Trading Volume
Stock Price Increase 60% since 2/26/08Volume Increase 80% 3 month Average Trading Volume
Cubic Energy Inc. (AMEX: QBC)Stock Price & Volume
260,200 1,027,000
419,800803,300
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1,142,5001,089,6001,021,800 1,170,000
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SMH Initiation Report
SMH Initiation Report
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Our Services Designed for Increased Exposure and Visibility
Strategic Investor Communication
12 month investor relations plan
Shareholder monitoring
Peer investor analysis
Investor road show services
Direct and constant conversations with institutional buy-side
Constant information to retail broker network
Partner with existing IR firms
Trading Support & Analysis
Assisting in matching buyers and sellers
Constant monitoring of industry news
Analysis of selling/buying pressure on stock
Online monitoring of stock bulletin board discussion
Equity Spotlight Reports
Initiating coverage report consisting of in-depth launch piece
Quarterly updates on coverage earnings reports
Monthly technical and liquidity analyses
Market notes and response to industry news
SMH Associates with direct dialogue with the company
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Leverage SMH Capital’s Broad Distribution Capabilities
Distribution Network
SMH Capital has powerful equity distribution capabilities. With extensive institutional relationships and retail brokerage offices across the nation, SMH has the ability to effectively place equity offerings in the right hands.
SMH RetailRetail focuses on providing unique investment opportunities to a core group of affluent individual investors.
Don Sanders FundsDon Sanders manages $1.0 billion in assets. For over 30 years, Don Sanders has successfully been one of the leading retail investment managers.
Middle MarketsDedicated middle market group covers the burgeoning hedge fund community,
tapping into the large liquid pools of capital with flexible investment strategies.
Institutional InvestorsExperienced institutional sales group
covers the traditional institutional investment community by leveraging
seasoned relationships.
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SMH Advantage – Retail Distribution
New York, NY OfficeHumbert Powell – Head of NY Office8 brokers
Boca Raton, FLJohn Egan – Head of Boca Office15 brokers
Tulsa, OKBill Mildren – Head of Tulsa Office8 brokers
Houston, TXStephen Cordill – Head of Retail10 brokers
Las Vegas, NVWayne Bieniasz – Head of Las Vegas Office6 brokers
Los Angeles, CADean Oakey – Head of LA Office5 brokers
Cleveland, OHPaul Blackman – Head of Cleveland Office15 brokers
“We see the ability to leverage MLS’s platform on behalf of our clients. It provides us with unique access to management, in-depth information, which gives us good, smart investment ideas. It’s a win-win situation.”
- Stephen Goodman, Middle Market Sales & Trading
Dallas, TXJim Moeller – Head of Dallas Office5 brokers
72 brokers + 42 SMH Partners (located in PA, NC, VA, GA, MD, IL, NM, CO)
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Launching Internet Platform
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Plan for First 3 Months
1st Month 2nd Month 3rd Month
• IR plan strategy with management
• Perform financial and legal due diligence at Companyheadquarters
• Draft and post company overview to MLS website
• Review management presentation and providefeedback
• Conference Call with SMH Associate for Equity Spotlight initiation report
• Conference Call with SMH Traders to introduce story to begin the trading monitoring process
• Review of timing of initiating coverage report
• Conference call with SMH Sales Team
• Conference call with specialists and sales forceto review feedback/answer questions
• Discuss timing of earnings releases and conference call
• Decide on schedule of non-deal roadshow
• Schedule meetings for non-deal roadshow
• Distribute Progress Report
• Distribute Trading and Shareholder Activity Report
• Continue to monitor shareholder activity
• Distribute analysis of trading and shareholder activity
• Schedule conference calls with existing and potential investors
• Discuss option of Google and Yahoo internet campaign
• Discuss potential conferences company could present
• Release Equity Spotlight Report
• Record video interview for MLS website
• Schedule non deal roadshows and retail visits
•Continue to monitor trading for selling pressures
•Distribution of any news releases
•Equity Spotlight quarterly update reports
•Monitor message boards for news on stock
•Incorporate feedback from institutional and retail on how to improve story (if needed)
•Conference call updates with Management for SMH Salesand investors
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Proactive Client-Specific Agenda
1st Month 2nd Month 3rd Month 4th Month 5th Month 6th Month Ongoing
Due DiligenceSite VisitRequest List - DocumentationBackground ChecksLegal Write-UpOngoing monitoring
ResearchInitial analyst meetingDraft/write initial reportDistributeQuarterly updatesMajor news notes
Strategic Investor ManagementPrepare plan 12 monthsPrepare "tearsheet" for internal distributionNon deal roadsshows (2x per year)Investor conferences (continuous monitoring)Shareholder AnalysisInvestor discussions
Continuous MonitoringShare pirce fluctuationsSelling pressureMessage board monitoringDiscussions with management
MONTHS UNDER RETAINER
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Equity Spotlight Reports
OVERVIEW• Publish Equity Spotlight reports designed to provide investors with
insightful, qualitative and quantitative data on both the clientcompany’s business model and growth prospects, but on the industry parameters as a whole as well.
SPECIFIC DELIVERABLES• In-depth initiating coverage report, consisting of 20 – 30 pages. See
ZBB Energy’s report as example (attached). • Quarterly updates to correspond to earnings releases, with initiating
coverage report included for completeness• Market notes or other updates to respond to major news events as
they unfold
DISTRIBUTION• Provided to client to verify facts before distributed• Press release by client• Pushed through SMH sales force and affiliated retail relationships• Published on SMH website and other electronic outlets
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Located in Houston, our MLS Equity Spotlight Team is comprised currently of three individuals that work in tandem with SMH Capital’s Institutional Research Group, which cover over 50 companies in 9 sectors.
Equity Spotlight Team
John Keeton - AssociateJohn Keeton joins SMH Capital from Koch Supply and Trade, where he was a senior natural gas trading accountant. Prior to Koch, John was an accountant at Burlington Resources/Conoco Phillips and a gas accountant at Superior Natural Gas. John holds an undergraduate degree in Business Administration from Texas State University, where he graduated Summa Cum Laude. John is currently in his final year of the Masters of Finance program at the University of Houston. At U of H, John is a Senior Portfolio Manager/Security Analyst for the University’s Cougar Fund, which manages over $9 million of privately invested money.
John currently covers Cubic Energy (AMEX: QBC) and ZBB Energy (AMEX: ZBB).
Anthony Valdivia – AssociateAnthony Valdivia joins SMH Capital from Wells Fargo, where he was a financial analyst for that bank’s Regional Commercial Banking division. Prior to Wells Fargo, and while attaining his B.B.A degree in finance from the Bauer College of Business at the University of Houston, Tony gained experience as a financial analyst intern at Spring Street Capital Management and as a finance and accounting intern at Superior Natural Gas. Tony is a CFA Level II Candidate.
Anthony currently covers Atrinsic (Nasdaq: NWMO) and Frontera Resources Corp. (OTCQX: FRTE).
Karen D.B. Kane – Assistant Director of ResearchKaren Kane serves as the department’s assistant director of research and is a research principal. Karen joined LovettUnderwood Neuhaus & Webb in 1984 as a research coordinator and retail sales liasion. She later became part of LovettUnderwood’s Energy Team and provided analytical support before joining Williams MacKay Jordan & Co., which wasacquired by SMH in 1996, as an assistant analyst. Karen earned an Economics degree from Cornell University.
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Trading Support & Analysis
OVERVIEW• Provide insight into the relative bid/ask pressures on
the stock, the sector changes and broad economic influences while tracking the trading on a daily basis
SPECIFIC DELIVERABLES• Monitor daily movements in stock, paying close
attention to broad sector pressures, specific company news, etc.
• Email weekly qualitative and quantitative update to management
• Prepare monthly comprehensive trading and ownership analysis that will have key metrics such as shareholder ownership changes, top institutional ownership in the peer group, technical analysis, valuation versus peer group, volume metrics, short interest changes, etc. See exhibit for example report.
PROCESS• Perform block trades as needed• Monitor selling pressure; provide liquidity and trades
when needed
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Strategic Investor Communication
OVERVIEW• Providing key strategic investor communication to ultimately increase shareholder base
with quality institutions and retail accounts.
SPECIFIC DELIVERABLES• Preparation of a 12-month IR plan within first 30 days of engagement to specify non-
deal roadshows, conference attendance, earnings release conference calls, etc.• Scheduling non-deal roadshows - minimum of 2x per year (more if major news
release). • Shareholder tracking and monitoring• Assistance with improving management presentation• Negotiating and scheduling conferences• Work with media outlets to correspond with news releases or other events as deemed
possible (Equities Magazine, Small Cap Advisor, etc.)• Initiate directed calling effort to accounts to provide research and other information• Specific reports back to client on calling effort and feedback received (see Sample
Progress Report]
PROCESS• SMH Capital Markets will communicate with buy-side to schedule non-deal
roadshows,etc.• Utilize partner IR firm.
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OTC QX Listing Option
• SMH Capital Is an OTC QX approved DAD/PAL
• The OTC QX is the place for reputable issuers to designate themselves from the rest of the over-the-counter market.
• Modeled after the highly successful NOMAD/AIM model, the selection of a DAD should be carefully considered as they can become your partner in establishing credibility and providing professional guidance. SMH is that partner.
• In conjunction with our MLS platform, listing on the QX will serve to enhance your company’s liquidity and exposure to a large U.S. investor base.
The company youkeep on the QX
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Media Attention
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Current Clients
Cubic Energy Inc. (AMEX: QBC)Independent Oil & Gas – Exploration & Production$125 million market cap
ZBB Energy Corporation (AMEX: ZBB)Renewable Energy – Energy Storage Solutions$20 million market cap
Atrinisic (Nasdaq: NWMO)Digital Media – Mobile Content$50 million market cap
Frontera Resources CorporationIndependent Oil & Gas – Exploration & Production$78 million market cap
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MLS Team
Joanne VerkuilenHead of Market & Liquidity Services
Karen KaneAssistant Director
John KeetonAssociate
Kathleen UngerDirector
Anthony ValdiviaAssociate
Randy BillhardtTrader
Core Team
Equity Reports
Trading
Contact
www.smhmls.com
Joanne VerkuilenHead of Market & Liquidity Services(212) [email protected]
Kathleen UngerDirector(212) [email protected]
527 Madison AvenueNew York, NY 10022(212) 317-2700