Capital Formation

Providing Comprehensive Capital Formation Services to the Microcap Market

At GVC, we are looking for quality, high-growth smaller
companies in order to establish a long-term financing relationship. While others have
recently exited the small company market, we continue to see great
opportunity in focusing on capital raising in the market.

GVC is ideally structured to provide its services to small
companies throughout the entire capital formation process. Our principals and their
associates in the Corporate Finance division are highly experienced in raising
private and public debt and equity in the market.

Delivering Value for Our Clients

In every step of the capital formation process, we work to
deliver upon our goal of providing maximum shareholder value. We view our role
in the capital formation process as being three-fold. One, finding the necessary
capital for our client. Two, negotiating the best terms for our client and its
shareholders to minimize dilution and provide the necessary growth capital. And
three, to maintain a long-term relationship and provide other value-added services,
such as valuation and strategic business advisory services, or mergers and
acquisitions advice. Other value-added services over the course of our
relationship with a client may include introductions to strategic alliance
partners, and new sales and marketing distribution channels identified by GVC
through its vast number of business and individual relationships.

Our Approach to Building Shareholder Value

With the ultimate goal of providing maximum shareholder value,
GVC takes a hands-on approach to capital formation. We have extensive meetings
with management to fully understand the capital needs of the company, both short-
and long-term. We then develop a comprehensive plan to raise the required
capital. By concentrating on shareholder value, we seek the least costly, least
dilutive form of capital.

In our capital formation planning, we first determine if the
company can attract traditional debt financing; typically the least expensive,
dilutive form of capital. If traditional debt is not an option,
we will then explore other hybrid forms of debt (i.e. convertible, mezzanine, and participating debt).

If a debt instrument is not feasible for our client, we discuss
several types of equity, preferred and common, which may be available. In many instances we are able to
provide both debt and equity financing simultaneously. By providing both
components, we are able to achieve the maximum amount of capital for the client at
minimal dilution to existing shareholders.

One of the most positive and highly differentiating attributes of
GVC is that its principals and core group of investors typically invest in the
companies we represent. Whether acting as an agent or investor, our goals and that
of management are aligned to provide maximum shareholder value.

Capital Instruments Available to GVC Clients

Described below are the capital instruments utilized to raise
money by GVC. Should you have any questions, regarding any of the various forms,
please contact us for a more detailed discussion and how GVC may be of service to


Common Stock: GVC works with individuals, institutions and, in
certain circumstances, members of GVC, to place common stock for our clients.

Preferred Stock: Normally this equity instrument carries
preferred rights over the common stockholders’ rights. These rights typically
are in the form of liquidation rights, dividend distributions, and claims to certain
assets of the company.


Senior debt: This form of debt is usually an asset-based
borrowing vehicle. An example would be a revolving line of credit secured by the
accounts receivable and inventory of the borrower. Also, senior debt can take the
form of leases and real estate mortgages.

Mezzanine/Participating debt: This form of debt usually has a
second lien position behind a senior lender. It is normally based upon a lending
formula based on cash flow. Companies that do not have a significant amount of hard
assets to borrow against often use this debt vehicle, but typically have a history
of cash flow.

Convertible debt: This debt vehicle is most often used in
situations where the company is seeking equity capital, but due to certain
circumstances, the lender is uncomfortable with the current balance sheet. The
advantage to a company of convertible debt, is if the company performs, and stock
value increases, the lender will convert the debt into common stock at a
pre-determined, negotiated price. If the lender converts its debt, the company is
relieved of the obligation to retire the debt, and can use the cash flow designated
to this debt retirement for growth.

Bridge Financing: This type of debt financing is used in
situations where the company requires additional capital to “bridge” it to a new
source of capital. This new source of capital is typically a sale of the business
or assets, or a new capital injection into the business. Bridge financing tends to
be a more costly form of debt financing as the lender’s repayment is conditioned
upon a future event outside the normal course of business.

Please contact any of the following individuals for further information:

Dick Huebner
Senior Managing Partner 720.488.4719

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