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Posts Tagged ‘Steven Gerbsman’

Successful “Date Certain M&A” of Pegasus Biologics Inc., its Assets and Intellectual Property

Posted in Board Of Intellectual Capital, boic, Community, Distressed Intellectual Property, Distressed IP, Economy, Gerbsman Partners, Intellectual capital, Investments, Strategy, Technology, Venture Capital, tagged , , , , , , , on July 15, 2009| 1 Comment »

Steven R. Gerbsman, Principal of Gerbsman Partners, Kenneth Hardesty and Dennis Sholl, members of Gerbsman Partners Board of Intellectual Capital, announced today their success in maximizing stakeholder value at Pegasus Biologics Inc., a venture capital backed medical device company. Pegasus Biologics focuses on the development of advanced biologic solutions. Applications range from the repair, augmentation, reinforcement and reconstruction of soft tissues to advanced wound management.

Gerbsman Partners provided Crisis Management leadership, facilitated the sale of the business unit, associated Intellectual Property and assets and recovered receivables. Due to market conditions, the senior lender and the board of directors made the strategic decision to maximize the value of the business unit and Intellectual Property. The senior lender recovered 100% of its principal.

Gerbsman Partners provided leadership to the company with:

  • Crisis Management and medical device expertise in developing the strategic action plans for maximizing value of the business unit, Intellectual Property and assets;
  • Proven domain expertise in maximizing the value of the business unit and Intellectual Property through a targeted and proprietary “Date Certain M&A Process”;
  • The ability to “Manage the Process” among potential Acquirers, Lawyers, Creditors Management and Advisors;
  • The proven ability to “Drive” toward successful closure for all parties at interest.

About Gerbsman Partners

Gerbsman Partners focuses on maximizing enterprise value for stakeholders and shareholders in under-performing, under-capitalized and under-valued companies and their Intellectual Property. Since 2001, Gerbsman Partners has been involved in maximizing value for 55 Technology, Life Science and Medical Device companies and their Intellectual Property and has restructured/terminated over $770 million of real estate executory contracts and equipment lease/sub-debt obligations. Since inception in 1980, Gerbsman Partners has been involved in over $2.2 billion of financings, restructurings and M&A transactions.

Gerbsman Partners has offices and strategic alliances in Boston, New York, Washington, DC, San Francisco, Europe and Israel.

For additional information please visit www.gerbsmanpartners.com.

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The Geography of Recession

Posted in Board Of Intellectual Capital, Community, Distressed Intellectual Property, Distressed IP, Economy, Gerbsman Partners, Intellectual capital, Investments, Market research, Technology, Venture Capital, tagged , , , , , , , , , , , , , , , , , , , , , , , , , on June 10, 2009| Leave a Comment »

Here is an analysis by John Mauldin at InvestorInsight. It was originally published as a special series at Stratfor.

John Mauldin is president of Millennium Wave Advisors, LLC, a registered investment advisor. All material presented herein is believed to be reliable but we cannot attest to its accuracy. Investment recommendations may change and readers are urged to check with their investment counselors before making any investment decisions. Opinions expressed in these reports may change without prior notice. John Mauldin and/or the staff at Millennium Wave Advisors, LLC may or may not have investments in any funds cited above. Mauldin can be reached at 800-829-7273.

This information is not to be construed as an offer to sell or the solicitation of an offer to buy any securities.

“Dear Friends: One of the first things you learn about analyzing a company is how to dissect a balance sheet. What assets and liabilities can be deployed by a company to create equity over time? I’ve enclosed a fascinating variant on this process. Take a look at how STRATFOR has analyzed the “geographic balance sheets” of the US, Russia, China, and Europe to understand why different countries’ economies have suffered to varying degrees from the current economic crisis.

As investors, it’s precisely this type of outside-the-box thinking that can provide us profitable opportunities, and it’s precisely this type of outside-the-box thinking that makes STRATFOR such an important part of my investment decision making. The key to investment profits is thinking differently and thinking earlier than the next guy. STRATFOR’s work exemplifies both these traits.

I’ve arranged for a special deal on a STRATFOR Membership for my readers, which you can click here to take advantage of.  Many of you are invested in alternative strategies, but I want to make sure that you also employ alternative thinking strategies. So take a look at these different “country balance sheets” as you formulate your plans.
Your Mapping It Out Analyst, John Mauldin

The Geography of Recession

The global recession is the biggest development in the global system in the year to date. In the United States, it has become almost dogma that the recession is the worst since the Great Depression. But this is only one of a wealth of misperceptions about whom the downturn is hurting most, and why.As one can see in the chart, the U.S. recession at this point is only the worst since 1982, not the 1930s, and it pales in comparison to what is occurring in the rest of the world.

(Figures for China have not been included, in part because of the unreliability of Chinese statistics, but also because the country’s financial system is so radically different from the rest of the world as to make such comparisons misleading. For more, click here.)

But didn’t the recession begin in the United States? That it did, but the American system is far more stable, durable and flexible than most of the other global economies, in large part thanks to the country’s geography. To understand how place shapes economics, we need to take a giant step back from the gloom and doom of the current moment and examine the long-term picture of why different regions follow different economic paths.

The United States and the Free Market

The most important aspect of the United States is not simply its sheer size, but the size of its usable land. Russia and China may both be similar-sized in absolute terms, but the vast majority of Russian and Chinese land is useless for agriculture, habitation or development. In contrast, courtesy of the Midwest, the United States boasts the world’s largest contiguous mass of arable land — and that mass does not include the hardly inconsequential chunks of usable territory on both the West and East coasts. Second is the American maritime transport system. The Mississippi River, linked as it is to the Red, Missouri, Ohio and Tennessee rivers, comprises the largest interconnected network of navigable rivers in the world. In the San Francisco Bay, Chesapeake Bay and Long Island Sound/New York Bay, the United States has three of the world’s largest and best natural harbors. The series of barrier islands a few miles off the shores of Texas and the East Coast form a water-based highway — an Intercoastal Waterway — that shields American coastal shipping from all but the worst that the elements can throw at ships and ports.

The real beauty is that the two overlap with near perfect symmetry. The Intercoastal Waterway and most of the bays link up with agricultural regions and their own local river systems (such as the series of rivers that descend from the Appalachians to the East Coast), while the Greater Mississippi river network is the circulatory system of the Midwest. Even without the addition of canals, it is possible for ships to reach nearly any part of the Midwest from nearly any part of the Gulf or East coasts. The result is not just a massive ability to grow a massive amount of crops — and not just the ability to easily and cheaply move the crops to local, regional and global markets — but also the ability to use that same transport network for any other economic purpose without having to worry about food supplies.

The implications of such a confluence are deep and sustained. Where most countries need to scrape together capital to build roads and rail to establish the very foundation of an economy, transport capability, geography granted the United States a near-perfect system at no cost. That frees up U.S. capital for other pursuits and almost condemns the United States to be capital-rich. Any additional infrastructure the United States constructs is icing on the cake. (The cake itself is free — and, incidentally, the United States had so much free capital that it was able to go on to build one of the best road-and-rail networks anyway, resulting in even greater economic advantages over competitors.)

Third, geography has also ensured that the United States has very little local competition. To the north, Canada is both much colder and much more mountainous than the United States. Canada’s only navigable maritime network — the Great Lakes-St. Lawrence Seaway —is shared with the United States, and most of its usable land is hard by the American border. Often this makes it more economically advantageous for Canadian provinces to integrate with their neighbor to the south than with their co-nationals to the east and west.

Similarly, Mexico has only small chunks of land, separated by deserts and mountains, that are useful for much more than subsistence agriculture; most of Mexican territory is either too dry, too tropical or too mountainous. And Mexico completely lacks any meaningful river system for maritime transport. Add in a largely desert border, and Mexico as a country is not a meaningful threat to American security (which hardly means that there are not serious and ongoing concerns in the American-Mexican relationship).

With geography empowering the United States and hindering Canada and Mexico, the United States does not need to maintain a large standing military force to counter either. The Canadian border is almost completely unguarded, and the Mexican border is no more than a fence in most locations — a far cry from the sort of military standoffs that have marked more adversarial borders in human history. Not only are Canada and Mexico not major threats, but the U.S. transport network allows the United States the luxury of being able to quickly move a smaller force to deal with occasional problems rather than requiring it to station large static forces on its borders.Like the transport network, this also helps the U.S. focus its resources on other things.”

John F. Mauldin
johnmauldin@investorsinsight.com

Read more here.

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BayBio – Life Science Events in Northern California – June 2009 – Steven R. Gerbsman to speak

Posted in Board Of Intellectual Capital, Business models, Economy, Gerbsman Partners, Intellectual capital, Investments, Life Science, Market research, Venture Capital, tagged , , , , , , , , , , , on June 7, 2009| Leave a Comment »

As innovators and leaders in a dynamic and competitive industry, Medical Device Companies of all stages of development share one thing in common. Intellectual Property. Protecting IP is a global issue that acutely affects the Medical Device industry. Whether you are an early stage start up, in clinical trials or have reached commercialization, your IP is your biggest asset. Join our panel for a discussion on how to protect, manage and defend you’re your Intellectual Property. Among the topics that will be addressed, strategy to prevent, or prevail in: enforcement; invalidity / title or ownership; infringement liability and defense; loss of value or revenue; contractual obligations.

Panel Moderator:
Thomas Meyers
Partner, Cooley Godward Kronish LLP

Panel Speakers:
Earl “Eb” Bright
General Counsel and Vice President, Intellectual Property, Exploramed Development, LLC

Steven Gerbsman
Principal, Gerbsman Partners

Trindl Reeves
Principal, Commercial Department, Barney & Barney

To view conference information – please go here.

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“Date Certain M&A” of SiCortex Inc – including its Assets and Intellectual Property (“IP”), in whole or in part (collectively, the “SiCortex Assets”)

Posted in Board Of Intellectual Capital, boic, Distressed Intellectual Property, Distressed IP, Gerbsman Partners, Investments, Technology, Venture Capital, tagged , , , , , , , , , , , , , , , , , , , , , , , , , , on May 28, 2009| Leave a Comment »

Gerbsman Partners has been retained by the Board of Directors of SiCortex, Inc. “SiCortex” or the “Company, to solicit interest for the acquisition of substantially all of SiCortex’s assets, including its intellectual property (“IP”), in whole or in part (collectively, the “SiCortex Assets”)

IMPORTANT LEGAL NOTICE
The information in this memorandum does not constitute the whole or any part of an offer or a contract.

The information contained in this memorandum relating to the SiCortex Assets has been supplied by third parties and obtained from a variety of sources. It has not been independently investigated or verified by Gerbsman Partners or their respective agents.

Potential purchasers should not rely on any information contained in this memorandum or provided by Gerbsman Partners (or their respective staff, agents, and attorneys) in connection herewith, whether transmitted orally or in writing (the “Information”), as a statement, opinion, or representation of fact. Interested parties should satisfy themselves through independent investigations as they or their legal and financial advisors see fit.

Gerbsman Partners, and their respective staff, agents, and attorneys, (i) disclaim any and all implied warranties concerning the truth, accuracy, and completeness of any Information provided in connection herewith and (ii) do not accept liability for the information, including that contained in this memorandum, whether that liability arises by reasons of Gerbsman Partners’ negligence or otherwise.

Any sale of the SiCortex Assets will be made on an “as-is”, “where-is” and “with all faults” basis, without any warranties, representations, or guarantees, either express or implied, of any kind, nature, or type whatsoever from, or on behalf of Gerbsman Partners. Without limiting the generality of the foregoing, Gerbsman Partners, and their respective staff, agents, and attorneys, hereby expressly disclaim any and all implied warranties concerning the condition of the SiCortex Assets and any portions thereof, including, but not limited to, environmental conditions, compliance with any government regulations or requirements, the implied warranties of habitability, merchantability, or fitness for a particular purpose.

This memorandum contains confidential information and is not to be supplied to any person without SiCortex’s or Gerbsman Partners prior consent.

The Company

Founded in 2004, SiCortex is a venture backed High Performance Computer systems company based in Maynard, MA. To date, the company has raised $68.1 million in funding from Flagship Ventures, Polaris Ventures, Prism Ventures, JK&B Capital and Chevron Technology Ventures.

SiCortex’s assets include: patents (granted and pending); proven, energy-efficient computer systems (the company’s core products); sophisticated systems and management software; core engineering team members; advanced simulations; chip design verification; existing and partially complete next generation products such as sub-assemblies, backplanes, racks, fans, cabinets, design tools, testing lab tools and products; software and hardware roadmap; trademarks; customers (including government intelligence agencies); The Pathscale® Compiler Suite, OEM, ISV and reseller relationships; external manufacturing relationships; experienced systems management and sales team; market presence.

Interested parties can acquire SiCortex’s core technology, market presence, sales pipeline, customer base, contacts and vendor lists enabling the purchaser to leverage existing business and customer relationships for future growth. Sales of existing products exceed 50% gross margins.

The sale of SiCortex assets is being conducted with the cooperation of the company SiCortex and its employees and retained consultants will be available to assist purchasers with due diligence and in a prompt, efficient transition. Notwithstanding this offer of assistance, SiCortex should not be contacted directly without the prior consent of Gerbsman Partners or the Board of Directors.

The SiCortex Solution

SiCortex addresses the compelling problem of data center energy constraints head-on, giving it a unique market opportunity in a world where, according to McKinsey & Company, 90% of data centers will run out of power capacity by 2010. SiCortex designs, develops and manufactures the world’s most energy efficient high performance computers (HPC). High Performance computing is typically targeted at academic, research and government agencies looking to run and operate sophisticated science. These organizations are power-constrained in their data centers and are looking for alternative solutions to cut consumption.

The SiCortex solution is a unique family of three computers (Desktop, Department and Division) scaling from 72 to just under 6000 processors in a single, compact machine. The systems consume 60-80% less electricity than comparably capable Intel-based systems (Cray, Dell, HP, IBM, sgi…). SiCortex systems are recognized as a viable alternative to Intel-based systems, and for certain applications, the preferred platform.

SiCortex created the “Green Computing Performance Index” or GCPI that is now used to measure energy efficiency of the world’s top HPC vendors. This objective index is based on industry standard benchmarks and ranks vendors on a performance/watt basis using 18 tests.

The SiCortex software stack comprises optimized Linux, open source libraries, tools and management utilities, all pre-integrated and highly engineered for ease of use and simple system management: a SiCortex system is more like a PC to operate than a typical Linux cluster. “It’s “ready to run”. These machines can be installed and be operational in less than an hour. Competitor systems can take weeks to be operational. All software running on Intel machines is binary compatible and will compile on SiCortex. SiCortex sells its products directly in North America (6 reps, 4 SE’s) and works with resellers in Europe.

Next generation products in development seek to extend SiCortex’s energy-efficiency industry leadership and broaden its market applicability to include financial services, biotech, petroleum, computer aided engineering and digital media. These next generation systems are projected to deliver a 90% energy efficiency advantage to the internet (LAMP) stack, enabling web-based businesses to increase web traffic capacity while slashing energy costs and reducing space, cooling and support costs.

SiCortex Customers and Partners

Customers include: US Government Intelligence agencies, Columbia University, MIT, Purdue, U of Michigan, U of Maine, Cambridge University, University of Colorado, GE, Booz Allen, Lockheed Martin, Argonne National Labs, NASA, and many more. SiCortex has reseller agreements in the United Kingdom with Streamline Computing, France and Nordic region with Clustervision and Germany with MegWare. SiCortex has porting arrangements with a growing number of Independent Software Vendors (ISV’s).

KEY POINTS – Why SiCortex Assets are Attractive

-Proven, delivered technology with an immediate top line revenue and performance improvement for customers looking for multi-core, highly scalable compute power with unparalleled energy efficiency.

-Market segments include Government agencies, Academia, research institutes, manufacturing, aerospace, moving into financial services, biotech, petroleum exploration/reservoir management, CAE, digital media and internet hosting…

-Over 300 codes, libraries, and applications run on the SiCortex platform with an applications engineering team porting more each week.

-Growth rate in Q1 2009 of 30% over previous quarter, 100% over Q1 2008

-75 computers delivered to customers, all running at 99% uptime with no returns and no support problems.

-Unique “system on a chip” design for elegance, efficiency and reliability

-Currently operating with >50% gross margins

-Patents support the unique technology. 1 issued, 12 pending. These patents center around the unique communications architecture built into the machine (no wires or cables) that provides for <1 microsecond access time to over 5800 processors.

-The systems fit right into existing data centers or even your office. Many customers are “tapped out” of power in their data centers; because of the machine’s efficiency, customers are able to operate our computers in small labs, hallways, even a closet (Columbia University). The unique airflow of the machine allows for this flexibility.

-Supports all Linux software, Gigabit Ethernet, Infiniband, multiple files systems (Lustre and NFS), supports a plethora of I/O devices as well as up to 70 PCI express slots. Supports flash memory.

SiCortex Product Assets are Substantial
A SiCortex system embodies numerous assets and IP. Principal assets include:

(1) Node chip: The SiCortex node chip is a proprietary design that incorporates all of the hardware elements needed for a high performance cluster computing node, except for commodity DRAM.

(2) CPU Modules: Node chips are mounted on CPU modules, which are printed circuit boards designed by SiCortex that interconnect the chips and provide power, mechanical support, system monitoring support, and attachment points for standard PCI Express I/O modules.

(3) Processors: the processors on the node chip are derived from the MIPS R5000, with SiCortex designed performance enhancements added.

(4) Level 1 and Level 2 cache: Each processor on the SiCortex node chip has a 256Kbyte Level 2 cache and a 64 Kbyte L1 cache, both designed by SiCortex. The on-chip hardware interconnect and coherency protocol that link the processor caches together was also designed by SiCortex. Both the Level 1 and Level 2 caches contain ECC protection to improve system robustness at large scale.

(5) Interconnect: the Node chips are interconnected by a proprietary fabric based on the Kautz graph topology. The fabric delivers industry-leading throughput and latency, and is implemented by a combination of switching elements on node chip, wiring on the CPU module, and and a proprietary backplane that interconnects the CPU modules.

(6) DMA Engine and microcode: the DMA engine is a custom microprocessor designed by SiCortex and optimized to support standard interprocessor communication protocols. The microcode that runs on the DMA engine supports primitive operations that are used by a wide range of communication libraries (see below).

(7) Communication Libraries: SiCortex has extensively modified and optimized numerous open source interprocessor communication libraries to take advantage of the microcode and hardware support for fast communication that is available in the DMA engine and the hardware interconnect. These include MPI, SHMEM, GASnet (which supports the UPC, coarray FORTRAN, and other parallel languages), the Lustre Network Device, and the Buffered Message interface (which supports PVFS, the Parallel Virtual File system). Outside developers are extending this work to build other libraries such as the Aggregate Remote Copy Interface (ARMCI).

(8) I/O: Every node chip includes an I/O port, compatible with third party interfaces that conform to the PCI Express standard.

(9) System software: The SiCortex system Linux kernel, commands, and libraries provide standard software interfaces that make optimal use of proprietary hardware. In addition to optimizing the Linux software base for SiCortex systems, SiCortex has added documentation, integration, and verification testing that improves the robustness and usability of the open source distribution.

(10) Packaged math libraries: The SiCortex development environment includes numerous widely-used software libraries that have been pre-built and packaged for use by application developers. The current suite of packaged libraries includes PETSc, GOTO BLAS, Atlas BLAS, SPRNG, FFTW-2, LAPACK, FFTW-3, BLACS, ScaLAPACK, GSL, NETCDF, HDF5, and GMP.

(11) SiCortex Optimizing Compiler Suite: The SiCortex optimizing compiler suite is based on intellectual property obtained through the acquisition of Pathscale LLC in 2008 (prior to the acquisition, Pathscale had been developing compiler software under contract to SiCortex). The SiCortex Optimizing Compiler Suite supports C, Fortran, and C++. All of the optimization steps in the compiler have been extensively tuned for the SiCortex architecture.

(12) GCC Tool Chain: SiCortex has adapted the open source GCC tool chain to support its systems, including modifications to the compiler and linker to enhance the performance of compiled code.

(13) Optimized Math Libraries: In addition to the packaged libraries, the SiCortex development environment inlcludes several libraries that have been hand-tuned for optimal performance on SiCortex systems. These include standard libraries for math functions (both scalar and vectorized), string manipulation, and performance-critical functions such as memory copy. These libraries are available to application developers and (where appropriate) used by the GCC tool chain and the SiCortex Optimizing Compiler Suite.

(14) Debugging tools: The SiCortex development environment includes several debugging tools, including the Gnu Debugger (GDB), a stack backtrace tool, and several options for diagnosing memory usage problems.

(15) Performance profiling tools: The SiCortex system supports a powerful set of performance profiling tools that support analysis and correction of problems that affect scalability. These tools are based on facilities inside the node chip that count events such as cache misses, CPU pipeline stalls, interprocessor messages, and IO operations.

(16) Independent Software Vendor (ISV) packages: SiCortex systems support a growing suite of packaged software available from third party developers. Today, packages include the TotalView debugger, the Tau and Vampir performance analysis tool set, and the MOAB resource management system.

(17) System Service Processor (SSP): The system service processor is a commodity X86 server that runs SiCortex-developed software that manages the system. The software includes utilities that control bootstrap, restart, and shutdown, along with software that monitors the system, sends alerts, controls the cooling subsystem, and triggers shutdown under extreme conditions such as room air conditioning failure.

(18) MSPnet: The Management Service Processor network is an Ethernet that links the System Service Processor to all of the hardware elements in the system, including power supplies, fans, temperature sensors, and the CPU Modules. MSPnet includes processors and software that run on each CPU module that monitor and control the Node Chips and on-board power distribution.

(19) Software Distribution: Distribution of system software on SiCortex systems is managed by a set of software utilities that, under the control of the system administrator, automatically fetch and install software updates from a SiCortex-maintained site on the Internet. When necessary, these utilities are also capable of deinstalling software updates.

(20) Cabinet: SiCortex systems come in three different cabinet types, ranging in size from a deskside unit that houses 72 processors to a 5′ X 5′ cabinet that houses 5,832 processors. Each cabinet includes a chassis that holds the CPU modules, one or more fan trays that cool the system, a power supply that converts computer room power to the voltages needed by the components in the cabinet, a system service processor, and other elements that support system management and I/O.

(21) Diagnostics suite: SiCortex systems come with a diagnostics suite that is used in several settings including manufacturing test, burn-in prior to shipment, and isolation of hardware faults in the field.

SiCortex experienced chip development team

SiCortex has been able to compete with teams from Intel, AMD and others 20 times the size of SiCortex by designing its own processor. SiCortex has been able to include everything except the memory. The capabilities are to include the memory controllers, a PCI Express interface, a DMA engine and even a slice of the network switch. The objective is to implement an entire cluster by iterating a single chip plus a couple of DIMMs. This has big cost savings due to size, performance, and power-consumption benefits. Not only does SiCortex believe this is cheaper, the Company is able to earn the gross margin on the CPU chip, instead of paying it to Intel or AMD.

The Company does not do full-custom design. SiCortex focus is on doing ASIC development using standard cell libraries and synthesis tools. In a given technology the clock rate is therefore lower, but the company compensates for that with more cores, and the lower clock rate is the key to low power consumption–2x the clock rate equals about 6x the power consumption… SiCortex only designs logic where the company can add value–the CPU pipeline, the cache coherency hardware, and the communication protocol hardware. Intel and AMD typically do everything in-house.

Less than 20% of the area of one of SiCortex chips is designed by the company. SiCortex’s chip team has the domain expertise to select and integrate commercially-available IP. The SiCortex chip team consists of 2 architects, 8 designers, and 20 verifiers (over half of whom are contractors). Their value is that without this key Intellectual Capital, SiCortex would have a lower-communications-performance, lower-margin, larger, higher-power-consumption product that would be much less well-differentiated from products that rely on purchased x86 CPUs and their supporting chipsets.

In summary, the SiCortex approach is most similar to that of IBM’s Blue Gene family, except oriented to the bottom 50,000 users, not the top 500.

The Bidding Process for Interested Buyers

Interested and qualified parties will be expected to sign a nondisclosure agreement (attached hereto as Exhibit-A) to have access to key members of the management and intellectual capital teams, as well as the due-diligence “war room” documentation (“Due Diligence Access”). Each interested party, as a consequence of the Due Diligence Access granted to it, shall be deemed to acknowledge and represent (i) that it is bound by the bidding procedures described herein; (ii) that it has an opportunity to inspect and examine the SiCortex Assets and to review all pertinent documents and information with respect thereto; (iii) that it is not relying upon any written or oral statements, representations, or warranties of SiCortex, Inc. or Gerbsman Partners, or their respective staff, agents, or attorneys; and (iv) all such documents and reports have been provided solely for the convenience of the interested party, and Gerbsman Partners (and their respective, staff, agents, or attorneys) do not make any representations as to the accuracy or completeness of the same.

Following an initial round of due diligence, interested parties will be invited to participate in a sealed bid process, for the acquisition of the SiCortex Assets. Sealed bids must be submitted so that it is actually received by Gerbsman Partners no later than, Thursday, June 25, 2009 at 2:00 p.m. (Eastern Daylight Time) (the “Bid Deadline”) at SiCortex office, located at Three Clock Tower Place # 210, Maynard, MA 01754. Also, please forward to all bids to steve@gerbsmanpartners.com

Bids should identify those assets being tendered for in a specific and identifiable way. The attached SiCortex fixed asset list may not be complete and Bidders interested in the SiCortex Equipment must submit a separate bid for such assets, Exhibit B. Be specific as to the assets desired.

Any person or other entity making a bid must be prepared to provide independent confirmation that they possess the financial resources to complete the purchase where applicable. All bids must be accompanied by a refundable deposit check in the amount of $200,000 (payable to SiCortex, Inc.). The winning bidder will be notified within 48 hours of the Bid Deadline. Non-successful bidders will have their deposit returned to them.

SiCortex reserves the right to, in its sole discretion, accept or reject any bid, credit bid all or part of its debt, modify bidding procedures, or withdraw any or all assets from sale. SiCortex will require the successful bidder to close within a seven-day period. Any or all of the assets of SiCortex will be sold on an “as is,” “where is,” basis, with no representation or warranties whatsoever. All sales, transfer, and recording taxes, stamp taxes, or similar taxes, if any, relating to the sale of the SiCortex Assets shall be the sole responsibility of the successful bidder and shall be paid to SiCortex at the closing of each transaction…

For additional information, please see below and/or contact:

Steven R. Gerbsman
steve@gerbsmanpartners.com

Other sources in regards to SiCOrtex: Cnet, MassHighTech, WBJournal, Boston Globe, TMCnet, GreenTech Media, NetworkWorld, GigaOm, NewYork Times.

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Worst Case Scenario’s for Technology, Life Science and Medical Device companies – the Norm, not the Exception.

Posted in Uncategorized, tagged , , , , , , , , , , on March 4, 2009| Leave a Comment »

By Stephen O’Neill, Esq. – Murray & Murray law firm

I was recently in Bankruptcy Court and I was having a discussion with a Bankruptcy Judge regarding “worst case scenarios”. On the way back to the office, I started to think about “worst case scenarios” and I realized that all of my clients, their management, directors and advisers need to start thinking about “worst case scenarios” because over the next twelve months “worst case scenarios” will become the norm not the exception. Here are the facts as I see them:

  1. Banks and Venture Lenders have dramatically reduced their lending.
  2. Banks and Venture Lenders are reviewing their loan portfolios to determine which of their clients are in the “danger zone” and they are taking aggressive actions to protect their positions.
  3. Venture Capital Firms have communicated to their portfolio companies not to expect further investments to fund negative cash flow and continuing losses.
  4. Economic conditions will significantly impact sale projections — bottom line, yesterday’s conservative projections are now very aggressive.
  5. Management of venture backed companies are by nature optimistic and almost never think of the “worst” case scenarios. Many management teams probably do not have experience, bandwidth or skills to deal effectively with distress.

What should Board members be concerned about and what should they do:

  1. The Board should scrutinize the Company’s cash position and projected cash flow/burn rate. The Board should drill down on the basic assumptions regarding the Company’s cash flow. The Board should consider hiring an outside party to conduct an independent evaluation of the Company’s cash flow and verify or refute Management’s analysis and assumptions.
  2. The Board should assess liabilities, both known and contingent, and the fair value of both tangible assets and intangible assets (for example, technology or supplier/customer relationships, lease rejection claims, severance claims). Again, the Board should consider hiring an outside consultant to guide them through the potentially unfamiliar territory of distress.
  3. If the Board determines that the Company has less than six months of cash, the Board should do the following:
    1. Obtain the advice of counsel, including insolvency counsel, to advise the Board and management of their fiduciary duties;
    2. The Board should expect in the current economic environment that further equity investment will not be forthcoming, and if sustainable cash break-even looks problematic, the Company should immediately formulate a set of options to avoid a forced crisis, including a sale process that will maximize enterprise value; and
    3. If the Company finds itself with less than six months of cash, a normal M&A process will not work. The Company should implement a “date certain” sale process, i.e., sale of the Company or its assets will have to close by a certain date due to the cash constraints of the Company. The Board should direct management or outside consultants to prepare a wind down budget which will allow the Company to sell its assets and wind down in an orderly fashion rather than a fire sale.
  4. Understand which constituencies the Board is representing (stockholders, creditors), and how those duties may or may not change depending on the Company’s financial status:
    1. Analyze the tradeoffs implied by each strategic alternative between creditors’ interests and stockholders’ interests;
    2. Confirm that the record reflects a sufficiently deliberative process and the Board’s awareness of its duties to stockholders and/or creditors. Document specifically the scope of fund-raising efforts and alternatives to financings (such as a merger, asset sale or reduction of operations to conserve cash);
    3. Actions that are implemented to increase stockholders’ value but put creditors at risk should be thoroughly scrutinized;
    4. One creditor or one class of creditors should not be given preference over another;
    5. Transactions that would constitute a preferential payment should be closely scrutinized;
    6. f) Exercise care in approving transactions that leave the Company inadequately capitalized even if the Company is solvent at the time; and
    7. Scrutinize all insider transactions.
  5. Assess likelihood of claims regarding breach of fiduciary duties.
  6. Confirm that indemnification agreements are in place (but note that unless adequate D&O insurance is in place, an insolvent company is unlikely to be able to satisfy its indemnity obligations as it lacks cash).

Stephen O’Neill is a partner in the law firm of Murray & Murray, A Professional Corporation. Mr. O’Neill specializes in advising financially distressed companies that are financed by venture capital. Mr. O’Neill was named a “Super Lawyer” by San Francisco Magazine in 2006, 2007 and 2008. Mr. O’Neill is also a frequent lecturer to professional organizations on all aspects of insolvency law.

About Gerbsman Partners

Gerbsman Partners focuses on maximizing enterprise value for stakeholders and shareholders in under-performing, under-capitalized and under-valued companies and their Intellectual Property. In the past 60 months, Gerbsman Partners has been involved in maximizing value for 51 Technology, Life Science and Medical Device companies and their Intellectual Property and has restructured/terminated over $770 million of real estate executory contracts and equipment lease/sub-debt obligations. Since inception, Gerbsman Partners has been involved in over $2.2 billion of financings, restructurings and M&A transactions.

Gerbsman Partners has offices and strategic alliances in Boston, New York, Washington, DC, San Francisco, Europe and Israel.

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