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Sterling Atlantic Fast Closing System: System Objectives

Sterling Atlantic Fast Closing System: System Objectives. Close small cap investments in rapid, low time cost, and low money cost system Invest in high quality assets Build Investment Banker systems so that they can effectively service client accounts and provide them rapid funding.

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Sterling Atlantic Fast Closing System: System Objectives

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  1. Sterling Atlantic Fast Closing System: System Objectives • Close small cap investments in rapid, low time cost, and low money cost system • Invest in high quality assets • Build Investment Banker systems so that they can effectively service client accounts and provide them rapid funding

  2. Sterling Atlantic Fast Closing System:Presentation Overview • Fast Closing Process • Key Drivers for Companies that Like the Fast Closing System • Company Frequently Asked Questions • Contact

  3. Fast Closing Process Step 1: Initial Investment Banker Review • What is last fiscal year Revenues and EBITDA?? • If not strong, does Company have world class management and a proprietary asset?? • What valuation is sought for the initial investment?? • Does Company have 1 year historic audit or can get it??

  4. Fast Closing Process Step 2: Summarize Transaction • Company completes Economic Summary (see form on Documents page) • Submit completed Economic Summary with Business Plan or business summary to Sterling Atlantic

  5. Fast Closing Process Step 3: Negotiate Key Terms • Sterling Atlantic response in <48 hours • Determine valuation and warrant funding structure for initial and follow on investments • Sterling provides email summary of basic investment terms • Agreement as to basic terms

  6. Fast Closing Process Step 4: Initiate Listing Process • Company signs engagement letter (~45 days to close) • Company wires €20k to German attorneys for preparation of documents • Company signs subscription agreement • Company signs listing sponsor agreement

  7. Fast Closing Process Step 5: Placement and Closing • Funds wired to escrow from GEM/Sterling institutional investors (close in ~ 14 days) • Listing applied for by Listing Sponsor • Listing and close of private placement

  8. Fast Closing Process Step 6:Post Listing on Entry Standard/ Open Market • Company prepares and files Prospectus (~€50k and 12 weeks) • Company admitted to Prime Standard division (300 total stocks, actively traded) • Active institutional promotion and liquidity • Company performance drives stock price

  9. Key Drivers for Companies that like the Fast Closing System • Want a multi-billion dollar partner • Need for cash quickly to support growth or buyout • Like the idea of stock appreciation • Like the idea of access to additional cash on short notice

  10. Company FAQ • What are listing and continuing costs? • Listing: legal €20k. Paid from closing proceeds: Listing Sponsor €50-100k, misc. placement fees ~5% of placement, misc. listing fees <€15k • Continuing: ~€25k annual listing sponsor fee, cost of quarterly and annual filings. Company should spend up to €100k on IR to build market. • Can I list on another Exchange as well? • Definitely yes. Deutsche Borse can be used to close a placement quickly before listing on say NYSE/Archipelago. Additionally, EU exchange gives an international positioning to the Company. • Who is funding the investment? • GEM, the GEM Global Yield Fund, and Sterling lead a syndicate of institutional investors, normally 10-15. The Exchange through the Listing Sponsor prefers this minimum number of institutional investors upon listing.

  11. Company FAQ (2) • How much of the Company must be placed? • The Exchange through the Listing Sponsor prefers a minimum of 15% of the total shares outstanding be available in the float. • Must our 1 year audit be under US GAAP? • No. An audit done under the local standards is acceptable. • How is the investment decision made? • Initially by Sterling then by GEM and Sterling. This is seamless to the Company as the initial investment decision is generally made in less than 72 hours. • May we submit narrative with the Economic Summary?? • Yes. We prefer seeing a business plan or executive summary with our Economic Summary form. The Economic Summary also provides for Sell Points which are the key reasons an institutional investor should invest.

  12. Company FAQ (3) • What is the structure of a typical investment? • For minority investments, we invest in ordinary shares. We also include a significant tiered warrant structure with forced executions to provide a built-in future funding mechanism for the Company assuming it executes its business plan. For buy outs, we generally invest in ordinary shares and conduct the listing simultaneously. • How is the Investment Banker paid? • Our preference is to include the investment banker compensation in our terms sheet in order to speed up transaction velocity. Generally the investment banker receives cash fees paid from closing escrow, warrant coverage, plus a share of any promote created upon listing. • How is Sterling paid? • Sterling receives its compensation from investing in Company plus a share of the profits from arranging the institutional syndicate.

  13. Company FAQ (4) • How do the principals meet? • We generally require a meeting in New York once the basic terms are agreed to. We seek to avoid time and expense on transactions that do not close so seek to make sure we have all significant deal points clarified up front. • What other deals have GEM/Sterling done? • The Entry Standard is a new exchange formed in October 2005 to compete with the AIM exchange. Our first listing there is Elite Models, which is in process to move to the Prime Standard. A partial list of other deals completed may be seen at http://gemny.com/investments2.html • Will GEM/Sterling co-invest in new acquisition opportunities? • Yes. This is one of our primary objectives in developing the Fast Closing System.

  14. Company FAQ (5) • What institutional investors are active in the aftermarket? • Institutional investors in the Prime Standard include many of the EUs large financial firms, including • UBS (http://www.ubs.com/) • DIT (Allianz Dresdnerhttp://www.dit.de/) • TIBCO (http://www.tibco.com/customers/adig.jsp) • Deutsche Bank (http://www.dws.com/pages/index.htm) • Allianz Global Investors (http://www.allianzinvestors.com/) • DZ Bank (http://www.dzbank.de/internet_en/index.jsp), • AIG (http://www.aig.com/gateway/home/1-70-0-0-index.htm) • AMB Generali (http://www.amb-generali.de/internet/amb/amb_inter.nsf/docs/home) • West LB (now in JV with Mellonhttp://www.westlb.de/cms/sitecontent/westlb/westlb_de/en.standard.gid-N2FkNDZmMzU4OWFmYTIyMWM3N2Q2N2Q0YmU1NmI0OGU_.html) • HSBC Trinkaus (http://www.hsbctrinkaus.de/global/tiles/display?def=00,00,00) • Union Investment (http://www.union-investment.de/)

  15. Contact For Immediate Response: • Franco Scalamandre • 818 710-7650 • fs@statl.com • www.statl.com Economic Summary form may be downloaded at www.statl.com, Documents page.

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