Market Opportunity

Micro caps have moved to private placements as a central source of capital for a variety of reasons. Few analysts cover micro caps in the market cap range where we invest, and this makes IPOs and Secondaries more challenging. Major investment bank consolidation has lead to a reluctance to raise capital for micro caps due to higher thresholds for return on resource allocation. Finally, the confidentiality and speed of private placements is attractive to many micro caps.

Private placements in public entities have become central to micro cap company capital formation since the late 1990's. In recent years, the private placements have consistently exceeded $20 billion in over 1000 placements annually. In 2006, for example, approximately 29B in PIPES were completed with the vast majority of transaction done in the sectors and market cap range where Crestview is focused.

In recent years, we have augmented our private placement skills by recruiting people who are equally well versed in seeking block trades or open market buys from targeted companies and acquiring 3rd party warrants and restricted stock that are unrelated to PIPE transactions. This flexibility makes us more nimble in a very dynamic investment space. Our approach to taking 2 to 6 million dollar positions in our portfolio companies and continuing to build a strong post-close relationship is consistent with a belief that our investments should enhance value for all shareholders.

We believe the greatest opportunity in our investment space resides with management teams that have the expertise to execute on their plan and get their story out to the marketplace so that volume and liquidity is enhanced as they move from micro cap to small cap stature. Our portfolio is not highly correlated to the Russell 2000 because our companies typically start with some potentialities that become more fully realized through the capital that we provide.