Wellfleet Partners, inc.

Over the past six months since we instituted day to day working operations for Wellfleet Partners, Inc. ("WP"), Zachary and I have felt that it was important to communicate in a written form with our current and future corporate and individual clients and professional associates. I was unprepared for both the tremendous favorable response to our first 4 newsletters and the amount of hard work and effort necessary to produce a monthly communication that we could be proud of. Several friends of mine gave us two suggestions which we will gladly follow: First, we will make them quarterly thus giving us more time to assimilate and analyze important financial developments; and Second, we will try to keep it shorter (brevity has never been an asset of mine) and accentuate it with interesting and timely quotes. For the latter two suggestions, I would like to acknowledge my dear friends and client, Dr. Howard Zimmerman whose busy schedule prevents him from reading anything longer than 5 minutes and Wayne Kaufman, Chief Equity Strategist (see later), for his idea of using "Quotes of the Month" to summarize the germane points of the newsletter.

Many of you that actively follow the market are undoubtedly aware of the proliferation and incredible success recently enjoyed by technology and Internet related companies that have gone "public". Initial public offering are the "stuff" of venture capitalists' dreams. Seed capital can often translate into profits that are in excess of 100x the initial investment. There are though other options for these emerging growth companies besides a public offering; Increasingly companies are selling out to other public companies at lofty values typically using the acquirers own high P/E stock to expand their base. It is almost a self-fulfilling prophesy (public company trading at lofty valuations needing to justify and enhance future revenue growth and sources of income...). Although venture capitalist and management prefer to utilize the public marketplace where higher valuations are typically found, often the offers are simply too good to resist.

A second option that is currently in vogue is private placements. The public markets may open and close as they did last summer and fall but the private marketplace is always available. The pricing, terms and assorted covenants may change, but the door is always open. During the second half of 1998 and the beginning of 1999, the private placement market has proven to be opportunistic to a wide array of issuers. Investors, perhaps frozen by the volatility of the public markets, became more selective looking for demonstrative value and extreme upside. The private equity and equity-linked sector grew 42% to $85 billion last year and with demand high and the public markets increasingly subject to wild fluctuations, the popularity of private placements should continue well into the millennium. A recently publicized investment banking firm, OffRoad Capital Corp. has taken it one step farther; they specialize in online, interactively offered investment opportunities for high newt worth investors in the form of private placements. This San Francisco based firm will eventually offer quarterly online Q & As with CEOs, financial data and chat rooms for these investors to contrast and compare and ultimately invest privately through its subsidiary broke/dealer. Their website, OffRoadCapital.com, is one of the best we have ever seen and we hope to meet with its CEO Steven Pelletier and staff soon.

As the aforementioned explains, we have determined that the most feasible and attractive form of financing for WPs are smaller private placements for technology based, emerging growth companies. We too have begun to work on our website, WellfleetPartners.com, and hope to be interactive by the end of the fall of 1999. With all venture capitalist and investors, the most important determination is always which company to finance and their proposed valuation. Valuation, historically a rather vanilla based decision, has become increasingly vague and nebulous. There is no rational way to justify recent Internet companies valuations. Small investors and quite recently, money managers have been paying up for these stocks because they have begun to understand that the e Internet changes all previously known business rules and the financiers of the early leaders will reap tremendous rewards. One popular analysis of the net present value of an Internet stock we subscribe to is determined by the number of its future aggregates users times the "affinity " factor (the tendency to remain site members). Perhaps one might consider that people's attitude towards risk has changed and thus so too has the model. Yet, the raging argument of valuation remains!

Last summer during the brutal bearish months in the stock market, a popular target for Bears was the enormous hedge fund Long-Term Capital Management. It had banked upon the historically accurate theory known as "convergence", that markets, be it for stocks, bonds or currencies, always revert to the mean. Those that thrived during that period understood that when significant divergence occurs, it can, on occasion, become a trend and continue for the foreseeable future. We see the popularity of the current internet - E Commerce craze and its potential in that light.

One question on the tip of the tongues of old-line "value" investors is how did Yahoo!, a startup company with no earnings, get to be worth twice as much as SEARS? Clearly something has changed! The market price of a stock has for years been driven by price/earnings multiples; many of these recent high fliers have no earnings to speak of. Fundamentalists like my father, of blessed memory, who purchased only utilities, oil companies and AT&T, a particular family favorite, would not even comprehend today's' trends. Yet there is some sense to these lofty valuations. Once the product area is established and appears sustainable, it makes sense to fold profits and earnings back into growth (e.g. R&D, advertising, marketing, acquisitions...). Why pay taxes on earnings when, especially with technology and internet based stocks, time is of the essence! A perfect example is Amazon.com, Inc. whose high flying stock and losses in excess of $120 million in fiscal 1998 seem in stark contrast with each other. Yet by eschewing near-term profits, utilizing aggressive acquisition and expansion programs and massive infrastructure spending, these companies are building brands and wide range brand awareness that could translate into tremendous revenues and profits in the future. Management of companies not confined by the constraints of hitting quarterly earnings targets, are fighting to inherit, as James J. Cramer calls it, "...the lion's share of the next generation's commerce..."

Our model, is to build a holding company of Internet and E-Commerce related equity assets through our merchant and investment banking and consultation related activities. With the introduction of each new corporate client our business base is broadened and cross opportunities and strategic alliances should hopefully continue to materialize. Thus, our clients, generally high net worth individuals, can participate in the financing and nurturing of technology and Net companies in their embryonic stage while we continue to accumulate minority equity assets.

We at WPs are proud to announce the signing of a Term Sheet for a Private Placement under the broker-dealer auspices of M.S. Farrell & Co., Inc. DORMONT TECHNOLOGY, Ltd., a Pittsburgh based company, develops and markets the StarTracker suite of software and data service products. Although easily adaptable to other industries, StarTracker is currently the music industry's only true "virtual marketing staff" that streamlines micro-marketing, sales efforts and coordinates artist's projects. Its internet applications, Data Diner, the proposed "Lexus Nexus" of the music industry, may open up their technology and data service to potentially thousands of new customers with the mere click of a mouse. In conjunction with the CEO Venture Fund, a well known locally based VC firm, we expect the Use of Proceeds from the raise to help the Company penetrate the vertical markets through advertising, broadcasting, marketing and publishing. The CEO Venture Fund has already invested $1.5m in the Company. Thus, it satisfies our requirement that our clien't's funds are not the first money in which is, of course, the most speculative. For more information on the Company and/or a Private Placement Memorandum, please contact our offices in late April.

We are equally pleased to announce our involvement in the funding and assisting in he formation of a Long Island based franchise office for M.S. Farrell & Co., Inc. We are especially please to affiliate with the aforementioned Mr. Kaufman who, as the Chief Equity Strategist of his affiliated money management and stock brokerage areas, we believe he brings another extremely valuable asset to offer our clients. In the wake of the online trading explosion (thus our recent investment in the management led private placement of Internet Financial service, Inc., proposed NASDAQ symbol "IFSX"), we believe many of our clients desire the ability to access information as well as trades on the Internet. Regardless of these new options available to investors, clients still, and will always seek professional investment advise. we want to be able to offer our clients the full spectrum of financial services either directly, or through affiliates. the financial service industry is at a strategic crossroads and firms like OffRoad Capital and ours that seek to come up with new business models that engage the "Brave New (Internet) World", could gain significant competitive ground.

Finally, we are excited to announce our agreement to move our corporate headquarters to One Penn Plaza in midtown, New York. With a magnificent view of all Manhattan and strategically convenient location for tri-state commuters, we are extremely excited about our new facilities. We hope to move in early June. On behalf of Zachary, may I wish you continued good health and prosperity and we hope you and your family enjoys the spring season.