Every January, FOCUS Enterprises founder and Chairman Marshall Graham composes an open letter to business associates and friends of the firm, candidly reviewing the past year, summarizing completed transactions, citing Partner and staff additions and generally looking ahead to prospects for 2004. Enjoy Marshall’s letter below.

Prior to founding FOCUS, Marshall was a senior manager at IBM, Xerox and Credit Card Service Corporation. In 1978, he co-founded Source Telecomputing Corporation, "The Source," sold two years later to Reader's Digest Association.

Please feel free to forward this newsletter to friends, colleagues and networking contacts. (Go to www.focusbankers.com for newsletter archives.)

Active FOCUS Deals

Although our firm has over 22 years experience across many verticals, FOCUS currently has active transaction engagements in the following specific business sectors:

• Business Services
• Consulting and Government Contracting
• Distribution
• Government Contracting (multiple assignments)
• Healthcare
• Healthcare Business Services
• IT Outsourcing
• Manufacturing (multiple assignments)
• Medical Devices and Equipment (multiple assignments)
• Public Affairs Software and Services
• RFID Technology
• Security (multiple assignments)
• Software
• Specialty Flooring
• Supply Chain Management Solutions
• Systems Integration
• Video Surveillance and Network Integration

Our transaction process provides us with up-to-the-minute market knowledge in these sectors that may be corporate development of interest to you.

Inquiries should be addressed via e-mail to info@focusbankers.com, by telephone to 202-785-9404, x 341 or by fax to 202-785-9413.

2003 in Review – FOCUS Revenue up 16%
By Marshall Graham

Despite an economy that was relatively depressed going into 2003, our merger, acquisition and divestiture business was quite active resulting in a very profitable and relatively hectic 2003. Compared to 2002, FOCUS revenue increased by 16% during 2003. On average, the firm served from 15 to 20 clients in any given month with several important transaction closings during the year.

In part, our success, as demonstrated by a growing assignment list, reflects a special FOCUS brand of client service. Evolving in response to the strategic and operational needs of our clients, especially in smaller companies, FOCUS delivers a unique blend of investment banking and corporate development consulting services. FOCUS clients experience a transaction process that is not only highly-structured but also disciplined and well-documented.

FOCUS clients are served exclusively by FOCUS Partners and Principals who deal with target company CEOs on a peer-to-peer basis. Our clients profit from a seasoned operating perspective incorporating a thorough understanding of management issues, potential alternatives and of critically important implementation issues. Not only have we done deals—we have been responsible for post-closing execution and have exited businesses through successful sales.

NEW PARTNERS, NEW PRINCIPALS, NEW OFFICES

Most important, FOCUS continues to meet its commitment to professional staff growth. During 2003, Timothy P. Johnson joined the firm as a Principal during the first quarter. Tim comes to FOCUS with an investment banking background from CIBC World Markets, Solomon Smith Barney and Friedman, Billings, Ramsey & Co.

Jack Bergstrom joined the firm as a Partner during the third quarter of 2003. Jack brings over 30 years of operating and transaction experience to FOCUS, having held senior positions with electronics, consumer products, manufacturing/distribution and healthcare firms. In mid-2002, Jack assisted with the sale of his last company, American Medical Laboratories, to Quest Diagnostics. Jack is maintaining his FOCUS office in South Carolina, covering mid-southern states for the firm.

During the fourth quarter of 2003, Brad Fleisher and George M. Shea joined FOCUS as Principal and Partner, respectively. Brad, a FOCUS Principal, recently served as President of Adlego Solutions, a healthcare consulting firm and also was a senior manager of Stone Street Capital, a specialty finance company. George, who joined FOCUS as a Partner, will operate out of a Jacksonville, FL office. George has been an independent investment banker for 14 years, operating as Ambassador Capital Corporation and completing numerous mergers, acquisitions and corporate sales for clients specializing in software; telecommunications, healthcare and IT services. George currently serves a national client base but also will cover the Southeast region for FOCUS.

These additions bring our firm’s professional complement to eight Partners, two Principals and a Director of Research. Kate Elliott continues to lead the FOCUS research department.

FOCUS also is in discussion with a small San Francisco-based boutique investment banking firm regarding a potential merger that would increase considerably our national coverage. Douglas Rodgers, our firm’s Managing Partner, also is having substantive discussions with candidates in Baltimore, Richmond and Philadelphia. We hope to have these geographies covered in early 2004.

In addition to establishing satellite FOCUS offices in Charleston, SC and Jacksonville, FL, in late November 2003, the firm relocated to much larger offices at 1150 Connecticut Avenue, Suite 515, Washington, DC 20036 (see the related article which follows).

COMPLETED TRANSACTIONS

Last year, FOCUS completed numerous M&A, corporate sale, consulting and strategic partnering assignments. Of particular note are the following closed M&A transactions:

The Healthcare Business Unit of March Networks Was Sold to Lifeline Systems (NASDAQ: LIFE).

FOCUS initiated the transaction, acted as financial advisor to and assisted with the negotiations as the representative of March Networks, a provider of emergency response solutions for senior living. The Healthcare Business Unit’s product line includes mobile and fixed wireless monitors and sensors and an automated response station supporting a variety of automated caregiver dispatch applications. Lifeline Systems, offered by over 2,500 healthcare providers across North America, connects individuals to the support of neighbors, friends and emergency services in the community

Topaz Technologies, Inc. Was Sold to Guidemore, Inc.

FOCUS initiated the transaction, acted as financial advisor to and assisted with the negotiations as the representative of Topaz Technologies, an application software company whose products collect and manage laboratory information in pre-clinical trials and basic research environments. Topaz has over 7,000 end users as well as license agreements with many of the world’s most prominent pharmaceutical, biotechnology, CRO, academic and government laboratory research organizations.

Guidemore was formed by Patrick Guider, CEO of Topaz, and other members of the Topaz management team, along with private equity investors, to purchase the firm from the venture capital investors. Shareholders include venture capital firms Chisholm Private Capital of Oklahoma City and the Woodside Fund of Redwood Shores, CA.

Newell Communications, Inc. (NCI) Was Sold to Diebold, Inc. (NASDAQ: DBD)

FOCUS initiated the transaction, acted as financial advisor to and assisted with the negotiations as the representative of Newell Communications, the leading building security integrator in the Richmond, VA marketplace. NCI provides a full spectrum of building security, life safety and communications products as well as design, installation, maintenance and inspection services. NCI’s customer base includes commercial, governmental and educational institutions and Fortune 500 corporations. Founded in 1971 by James R Newell, NCI has 34 employees and is led by Rebecca Hite, president since 1999, who continues in this capacity post-acquisition by Diebold.

Diebold is a global leader in providing integrated self-service delivery systems and services. The Canton, OH firm, founded in 1859, employs more than 13,000 associates with representation in more than 88 countries. The Integrated Security Solutions unit of Diebold provides global sales, service, installation, project management and monitoring of original equipment manufacturer (OEM) electronic security products to financial, retail and commercial customers. The transaction, which closed in January, 2004 was managed by a FOCUS team including Douglas Rodgers, Managing Director and CEO, Timothy P. Johnson, Principal, and Kate Elliott, Director of Research.

LOOKING FORWARD TO A ROBUST 2004

As the economy continues to improve in 2004, we expect increased merger, acquisition and corporate sale activity. Also, as the capital markets loosen for mid market, small and emerging companies, we look forward to once again offering capital formation services to our clients.

FOCUS is dedicated to becoming a national and then international firm. While substantial progress toward this goal was achieved in 2003, we believe we will meet this objective by the end of 2004. We wish all of our friends, clients and colleagues a most profitable 2004.

For more information, contact Marshall Graham at 202-785-9404, x 226 or via e-mail at graham@focusbankers.com.

FOCUS Growth Triggers Move into New Offices

The rapid growth in FOCUS staff, along with a need for dedicated conference facilities, led us to move in late November. We are now located in a convenient and modern office building at the corner of Connecticut and M Streets in the heart of the Washington, DC business district.

Because we moved only two blocks, our telephone and fax numbers are unchanged. Please note our new office address:

1150 Connecticut Avenue, NW, Suite 515
Washington, DC 20036

Our new headquarters is well-suited to our rapidly expanding firm. Spacious and filled with light, the new offices include a large and well-appointed conference room, a handsome reception area, ample office space for staff, and a small private kitchen. The building supplies state-of-the-art infrastructure and direct elevator access to underground parking.

Once the new furniture arrives and we have a few more pictures on the walls, we will host an Open House. Watch for an invitation in the spring.

Realizing and Preserving Value--A Workshop for Business Owners
Nine New Workshops Scheduled in Seven East Coast Locations

To help business owners and CEOs assess the risks and opportunities of selling a business, FOCUS Enterprises, along with four other firms -- Shared Equity Strategies; McCullough & Nicholas, P.L.C.; Bernstein Investment Research and Management and Planning and Strategic Solutions, L.L.C. -- is hosting ten private Workshops from March through November in six different East Coast and two Midwestern locations.

Business Owners and CEOs Gain a Wealth of Valuable Information

Whether you’re driving your business to the next level, considering corporate finance options or M&A activity or simply planning your personal finances, this new Workshop supplies excellent take-home value. Workshop participants will learn how to:

• Position a company to maximize the valuation multiple
• Prepare a company to maximize the sale price
• Time when to begin preparing for the sale
• Minimize personal taxation on the transaction
• Determine exactly how much is needed to retire comfortably
• Execute the process successfully

You’ll gain useful and actionable information in intense, interactive half-day Workshops meeting from 7:30 am through 1:30 pm. In the Washington DC area, the program also is being presented in two shorter breakfast sessions from 7:30 to 9:15 am.

The Program and Format Ensure Value for Participants

We can’t over-emphasize the value of careful advance planning, even for events that may be two or three years away. For example, you need to set up trust structures well in advance of a transaction. Also, in order to understand the right "threshold value" for an M&A transaction, pre-transaction planning on income is required.

As a Workshop participant, you’ll receive five concise worksheets that supply the tools you need to assess your own specific situation, opportunities and needs during the course of the workshop. In each of the five sessions, you’ll also have ample opportunity for Q&A, plus, at the close of the Workshop, a panel discussion features a general Q&A session. Presenters also are available for informal discussion during breaks and at the end of the workshop.

Each of the five presentations listed below will contribute to your practical understanding of how to maximize, realize and extend value:

BUILDING VALUE -- Marshall Graham, Chairman, and Doug Rodgers, Managing Partner, Focus Enterprises, Inc.

CONVERTING VALUE -- James F. Higgins, Jr., Principal, Shared Equity Strategies

SHIELDING VALUE -- John E. McCullough, Esq., McCullough & Nicholas P.L.C.

PROTECTING VALUE – Kenneth A. Shapero, Planning and Strategic Solutions, L.L.C.

PRESERVING VALUE -- Joseph M. Perta, Vice President and Michael A. Bono, Vice President, Bernstein Investment Research and Management,

2004 Participants Can Select the Most Convenient Time and Location

All but two of the nine Workshops will begin at 7:30 am and continue through lunch until 1:30 pm. Two Washington DC breakfast Workshops split the content into two 7:30 to 9:15 am sessions.

Who Should Attend?

Individuals who will benefit most from this unique Workshop include presidents, CEOs and owners of companies who are considering some type of sale or recapitalization within one to five years. Relevant companies are: private companies, public companies with revenues under $100M, government contractors, venture-backed companies, individual- or family-owned companies and companies who have or are considering ESOPs.

Reserve Your Workshop Now

Participation in the half-day Workshops, strictly limited to company owners and CEOs, is $ 250 each for the first participant and $100 for each additional person from the same company, payable in advance.

Participation in the breakfast Workshops is $150 for the first person and $50 for each additional person, payable in advance. Register online at www.focusbankers.com, call 202-785-9404, Ext. 223, or send an email to Brad.Fleisher@focusbankers.com.

FOCUS Expands Staff, Facilities and Geographic Coverage

WASHINGTON DC, January 22, 2004--FOCUS Enterprises, Inc., the DC region’s premier investment banking and corporate development consulting firm providing merger, acquisition and corporate finance services for middle-market clients, is adding an eighth Partner, George M. Shea, based in Jacksonville, FL and a second Principal, Brad Fleisher, bringing the total professional staff to eleven.

In addition, the firm has moved to larger offices at 1150 Connecticut Avenue, Suite 515, Washington, DC 20036 and is establishing satellite offices in Charleston, SC and Jacksonville, FL.

“FOCUS is dedicated to becoming a national and then international firm. Adding a seasoned professional like George Shea along with an entrepreneurial attorney like Brad Fleisher to our team helps ensure the success and unique capabilities of the firm,” explains Marshall Graham, Chairman of FOCUS. “As the economy continues to improve, we look for increased merger, acquisition and corporate sale activity,” says Mr. Graham.

George M. Shea, joining FOCUS as a Partner, brings 30+ years of industry experience in acquisitions and divestitures, private placements of capital, business development and strategic planning and operations, acting as a principal or facilitator in over 100 transactions. Mr. Shea arranged the largest single infusion of equity capital ($25 Million) in Georgia’s history into an early stage technology-based company, a transaction named “Venture Capital Deal of the Year.”

For the past 14 years, Mr. Shea ran a boutique investment bank, Ambassador Capital Corporation, of Atlanta and Jacksonville, acting as a finder and consultant in new business development activities. Mr. Shea also was President and CEO of InfoSafe Corporation, a telecommunications and software company, and was Digital Equipment Corporation’s first Industry Marketing Director.

A graduate of Colby College, George Washington University and the Stanford Executive MBA Program, Mr. Shea serves on the Board of the USO (United Services Organization).

Brad Fleisher, joining FOCUS as a Principal, is an entrepreneur and attorney with over ten years of business development experience with finance, healthcare, consumer technology and radio broadcast companies. Prior to joining FOCUS, Mr. Fleisher founded and was President of Adlego Solutions, a healthcare consulting firm. He also was Director of Product Development at PromiseMark, Inc., a venture-funded technology company, where he developed the company’s top revenue-generating product and initiated and closed 19 strategic partnership transactions. 

Previously, Mr. Fleisher was Senior Associate, New Product Development, for Stone Street Capital, a specialty finance company and from 1994 to 1998, Mr. Fleisher was In-House Counsel for Eastbrokers International (NASDAQ: EAST), a Central European Investment Bank. He also co-founded and was Executive Vice President of Spectrum Europe, an Eastbrokers spin-off.

Mr. Fleisher, an active member of the District of Columbia Bar, has a B.A. from Tulane University and a J.D. from the University of Florida.

About FOCUS Enterprises, Inc.

For 22 years, FOCUS has successfully assisted clients with corporate development consulting assignments; merger, acquisition, and divestiture engagements plus capital raising and capital formation assignments. In a mixture of services uniquely beneficial to clients, FOCUS integrates consulting and transactional expertise with superb research capabilities and precise, proven methodologies.

Unlike larger investment banks, FOCUS processes are optimized and proven effective in our target marketplace -- private companies or operating units with revenues in the $5 million to $100 million range. Eleven full-time FOCUS Partners provide well over a century of C-level operating experience in a variety of industries. Operating nationally and internationally, FOCUS works with buy- and sell-side corporate clients, private equity groups, holding companies and early stage venture capital firms in the following areas:

• Aerospace
• Government Contracting
• Healthcare
• Manufacturing and Distribution
• Media and Communications
• Retail
• Technology (hardware, software and services)
• Telecommunications

Your comments, suggestions and questions are welcome and encouraged. We want to hear from you.

You are receiving this newsletter because you have had personal contact with a FOCUS Enterprises partner or principal or have requested this newsletter on our website or have been contacted by FOCUS on behalf of a buyer, seller, corporate finance client or consulting client.

• Please contact us at: info@focusbankers.com
• Visit the Focus website at http://www.focusbankers.com