In ancient times, a King had a boulder placed on a roadway. Then he hid and watched to see if anyone would remove the huge rock. Some of the king’s wealthiest merchants and couriers came by and simply walked around it. Many loudly blamed the king for not keeping the roads clear, but none did anything about getting the stone out of the way. Then a peasant came along carrying a load of vegetables. Upon approaching the boulder, the peasant laid down his burden and tried to move the stone to the side of the road. After much pushing and straining, he finally succeeded. After the peasant picked up his load of vegetables, he noticed a purse lying in the road where the boulder had been. The purse contained many gold coins and a note from the king indicating that the gold was for the person who removed the boulder from the roadway. The peasant learned that every obstacle presents an opportunity to improve our own condition.

As we deal with the daily shocking turn of events associated with Enron, Congress has been entrusted with the daunting tasks of trying to decipher the Company’s financial transactions and how to restore investor confidence in our market and system. Unfortunately although Enron’s demise was unprecedented in scale and its breath of losses, it was in no way unique. Seventy years ago a company called Middle West Utilities, a holding company comprising the vast empire of the late energy magnate Samuel L. Insull, abruptly declared bankruptcy amid cries of accounting irregularity, stock fraud and self-dealing. Thousands of investors representing millions of dollars were wiped out. Middle West, like Enron, was comprised of a host of interconnected companies with interlocking boards concealing a web of off-the-balance sheet financings. Mr. Insull, like the now infamous Ken Lay, was an active campaign contributor with powerful friends in Washington. Both were groundbreaking companies and it was Middle West that pioneered the 24 hour a day power plant, to defray fixed costs, ("called mass production"). The Company became so powerful that by the 1930s it was suspected of manipulating the US energy markets in "unseen ways." After accumulating tremendous debt, in 1932 Middle West and many of its 284 affiliates were placed in receivership. Like in today’s events, Congress quickly acted to attempt to restore the public’s confidence in the government and market’s ability to police these companies. The Securities Acts of ‘34 & ’35 and other energy related legislation was passed to insure better information flow. Mr. Insull fled to Greece but was later arrested and shipped home where he stood trial for massive fraud and embezzlement. All three trials ended in acquittal. He lost all his personal fortune, unlike the Enron executives who cashed out years before, and he died years later in Paris penniless still defending his lingering litigation. (Source Wall Street Journal, Rebecca Smith).

As Americans examine the Management of many of our treasured high fliers (e.g. Enron, Global Crossings, Hewlett-Packard ("HP"), Compaq) we can not help but notice certain similarities. There seems to be a schism about the difference between appearance and reality. Jeff Skilling, former CEO of Enron, was known to beret analysts, investment bankers and/or employees who didn’t "get it." He went so far as to call one analyst on a conference call who expressed curiosity about the Company’s convoluted finances an "asshole." Yet Mr. Skilling, Mr. Lay, Garry Winnick and his management team at Global Crossings liquidated hundreds of millions of dollars worth of stock in their own companies. This new breed of management cares about appearances, wealth and power and is indifferent to their shareholders and employees. Carly Fiorina, CEO of HP, fired 6,000 employees this past summer. Before she took the helm HP had never laid off a single employee; Ken Lay was still touting his Company’s stock in chat rooms while liquidating his own position weeks before Enron’s house of cards imploded. As compared to Bill Gates, Andy Grove, Steve Jobs and even the retired and deceased Messrs. Hewlett and Packard, whom inspired loyalty and provoke creativity. They value their employees and products manufactured above all else and do not lie to their investors. Where did we go wrong? Enron is to our free market system and policy of government supervision what September 11th was to our national security and the perils of terrorism – A very costly, yet needed wake up call!

The business of venture capitalism in America or financing for emerging growth companies is not dead. Great new ideas still emerge daily. Historically periods of great economic challenge have proven to be a fertile time to start companies. Sixteen of the Dow’s thirty companies where started during recessions. In 1982, while the US was in the midst of a terrible recession and suffering through 20% interest rates, Sun, Compaq, Aliode, Silicon Graphics and Lotus were all started. Venture capitalists, while sobered by the failure of 80 – 90% of their portfolios over the past two years, are asking tougher questions but the money and pool of talent is still there.

We at WPs have had an interesting quarter, focusing mainly on our current core group of consulting and portfolio clientele and general M&A services. We welcomed four new international members to our family of consulting portfolio companies, three of whom, Simply Hub PLC, the Magic Cauldron Company and Bagelmania, PLC are headquartered in the UK. FrontLine Education, a unique management companies for teachers, also retained our services. For months we have been searching for a high yielding debt instrument (12% interest) with a large equity kicker (warrants equal to 4% of the Company). We are pleased to announce that shortly we hope to offer, through our NASD member brokerage affiliate, KSH Investment Group, Inc. ("KSH"), $1.5M of 12% Senior Subordinated Notes of Campus Media Holdings, Inc. ("Campus"). Campus is a media, advertising and marketing company based in Baltimore, Maryland with additional offices in NYC and Los Angeles that caters to college students through its various resources (e.g. Unofficial Student Guide®, Sports Board®, Product samplings, Intramural Recreational Sports and the Internet. PPMs should be available by mid April. In addition, two of our current portfolio companies, IP2M and LTV Networks both, as a result of our extensive efforts, received and signed Letters of Intent for material corporate developments. LTV Networks, a New York based Latino cable channel (Channel 39 in New York City), signed a Letter of Intent to merge with a public company introduced by WPs. The transaction includes a bridge loan, a material investment by the financier-major shareholder of the public company and subsequent "PIPE", a Private Investment of Public Equity. The entire transaction could represent approximately $6M in financing. IP2M, a Houston based integrated platform media and advertising company, likewise signed a Letter of Intent to be acquired upon certain contingencies by one of our portfolio companies, Synergy Brands, Inc. (NASDAQ Symbol "SYBR"). The transaction gives the IP2M shareholders the opportunity to earn up to approximately 20% of the Company based upon hitting certain performance criteria. News releases and a Research Report on SYBR issued by KSH are available upon request.

Finally, our lending entity, Spider Financial, Inc. ("Spider") rendered small bridge loans to National Preplanning, Inc. to help finance in its reverse merger with Walker International, (NASDAQ Symbol "WINT"), Campus Concepts, Inc., for general working capital and we are in discussions and early stages of due diligence with another recent addition to WPs/Spider’s consulting clientele, Continental Divide Resources in Littleton, Colorado.

We were very pleased to also announce two new strategic alliances this past quarter. Those of you that have received our beautiful new brochures (special thanks to Janna at Brighton Talented) have seen our press release about Sinclair Silverman, our new London based investment banking partners. Chartered Accountants as well, Sinclair Silverman is a boutique European based investment banking and corporate finance firm that will strategically and geographically enhance WPs’ sphere of its international financial service activities. We are already working with them on the three aforementioned UK based projects.

In addition, we recently announced a strategic alliance with KCSA Public Relations Worldwide, a leading independent Public and Investor Relations firm headquartered in New York City, with offices in Los Angeles and Israel and other strategic alliances as well in Canada, Australia, Russia and South America (www.KCSA.com). Over 33 years in business, KCSA has assisted scores of public and privately held companies and institutional organizations in devising and implementing communications strategies tailored to achieve their business objectives. We now anticipate offering public and investor relations to primarily our publicly traded portfolio companies and expect to see a wide variety of new financing opportunities (e.g. bridge loans, private placements, reverse merger candidates, mergers and acquisitions…) from KCSA. Working with an old friend Stanley Wunderlich, Managing Director of KCSA, we believe this strategic alliance further enlarges the scope of services provided for by WPs and/or its affiliates and opens up the door to new opportunities as well. By sharing similar corporate philosophies, KCSA and WPs, especially in our consulting services, are very synergistic.

Finally, on behalf of the Management and Employees at WPs, we want to welcome Ronniel Levy, Esq. to our facilities where, besides harboring his successful law practice, he will serve as a second quasi in-house corporate counsel for WPs and our bridge loan entity Spider Financial. Ron, formerly the corporate counsel at First Asset Management and a corporate/securities attorney at the Long Island based Kaufman & Moomjian and NYC based Snow Becker, is a wonderful addition to our firm. Welcome aboard. As our fair city returns to normalcy and our country basks in its military victories half-way across the world, we turn our attentions to our own indigenous problems. Let us hope we learned our lessons, will not be complacent about our nation’s security and will see peace in our time. Fall back, SPRING FORWARD…