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Our
History and Development
Our
Investment Company Business after SDI’s Reorganization
Our
Investment Plan
Our
Operations
Regulation
The Market
for our Loans and Related Services
About
our Principals
Aztoré
Holdings, Inc. (“Aztoré”, “We” or “Our”)
was organized on May 16, 1995 as an Arizona corporation
to own the assets of ShareData Inc.
(“SDI”) under SDI’s Chapter 11 Reorganization Plan
(the “SDI Plan”).
We could also be considered the successor to the
business of Bulldog Investment Company, L.L.C.
(“Bulldog”) and an even earlier informal partnership
between two of our senior officers, Michael S. Williams
and Lanny R. Lang.
Upon confirmation of SDI’s Plan in December, 1995 and the Court approved merger of SDI
into Aztoré, we began to operate as a non-diversified,
closed-end, management investment company.
Since then, we have developed a
portfolio of debt and equity securities in over 30
companies. As an investment company, we report our
investments on a “mark to market” basis for
accounting purposes.
Our principal office is located at 14647 S 50th ST, Suite 130, Phoenix, AZ
85044. Our
phone number is (480) 759-9400 and our facsimile number
is (480) 759-9401. Bulldog
Investment Company, L.L.C.
Mr. Williams and Mr. Lang formed Bulldog in
December 1993 to formalize an informal partnership
formed in late 1990.
Besides managing SDI’s bankruptcy, Bulldog’s
business plan was to operate as a non-diversified,
closed-end, management investment company and provide
investment banking and consulting services to early
stage and emerging growth public companies. This business plan eventually became SDI’s
post-reorganization business plan in January 1996 when
Bulldog’s assets were acquired by Aztoré in
conceptual merger.
Messrs. Williams and Lang became full-time
employees of Aztoré in July 1996. Our Investment Company Business We
have evolved dramatically since our original concept,
which was to file a bankruptcy reorganization plan to
retain and exploit SDI’s significant net operating loss
carryforward. The “holding company” reorganization plan we formulated
in early 1995 was modified to allow us to start to
operate as an investment company effective January 1,
1996. We
took our experience and contacts gained in Bulldog and
transferred them to Aztoré.
Because of our business plan focus on high growth,
financially extended companies, we in effect now operate
as a public venture capital fund.
Although this business plan inherently means our
portfolio is risky, our performance proves that a portfolio of this nature can
generate significant returns. Our
primary investment objective is to achieve capital
appreciation rather than current income.
Our Equity Participations in the Portfolio
Companies include equity, warrants, debt (with or
without conversion rights) and preferred stock with
conversion rights.
Often we take a combination of Equity
Participations in any one transaction.
We also perform advisory assignments for a fee to
determine if we should seek a long-term relationship
with a particular company.
In many cases, we acquire investments at very low
prices in conjunction with our consulting engagements. The
Portfolio Companies we invest in are generally public
companies, or companies that are positioned to become
public in the foreseeable future through an offering or
merger into a public company.
To realize on our equity participations, a
secondary market must exist or develop for a Portfolio
Company’s common stock.
We may assist Portfolio Companies in this
secondary market development. Investment
objective.
Our primary investment objective is to achieve
dramatic capital appreciation of our Equity
Participations, rather than current income.
We believe that our investment strategy can produce dramatic
rates of return. We
also believe that there are a sufficient number of
potential investment opportunities available to enable
us to achieve our investment objective. Investment
Policies.
We have developed a general policy framework from
which we will operate.
Our investment objectives and non-diversification
status may be changed at any time and from time to time
without shareholder approval.
Our general policies are described below, but are
not all-inclusive.
In
general terms, we operate as a “Merchant Banker.”
This is a European concept that can best be
understood by what it is not.
A Merchant Banker is not an Investment Banker,
who raises money for companies by doing underwritings
into the public market.
A Merchant Banker is not a Commercial Banker, who
just lends money for an interest rate return.
A Merchant Banker is a securities focused holding
company that lends and invests its own funds. A Merchant Banker takes different risks then either an
Investment Banker or a Commercial Banker, but is still a
type of financial intermediary, not an operating
company. Merchant
Bankers may take an active role in their investees’
financial activities.
However, our intent is not to operate any of our
Portfolio Companies, except on a crisis or developmental
basis while new management is recruited.
In certain instances, we may also act as an
advisor or investment banker regarding arranging mergers
or sales of companies. Also, with the exception of a few companies like
us, the flexibility of other publicly held investment
companies is generally highly constrained by the 40 Act.
We intend to
specifically maintain an organization that avoids the
regulation of the 40 Act, which we believe we offers investors
an attractive mix of investment attributes. We
expect that a majority of our returns and revenues will
arise from the appreciation in value of our Equity
Participations. However,
we also regularly charge our Portfolio Companies cash
consulting, advisory and management fees and generally
strive to cover our out-of-pocket expenses, as they
would relate to a particular Portfolio Company
investment. Charging
an initial monthly consulting fee also serves as a
preliminary screen to keep us from being overwhelmed
with potential investments, provides leverage to obtain
a larger equity position and minimizes our downside
risk. Our
personnel may provide consulting services for our
Portfolio Companies.
Since our growth portfolio is primarily public
companies and/or high growth companies, such companies
need a more sophisticated financial officer.
We
are currently exempt from reporting and regulation under
the Investment Company Act of 1940 due to an exemption in Section 6(a)(2) of
such act. We
believe we qualify under this exemption and do not
believe that maintaining this exemption will materially
constrain our operations. This exemption states that: “Any company
which since the effective date of this title or within
five years prior to such date has been reorganized under
the supervision of a court of competent jurisdiction, if
(a) such company was not an investment company at the
commencement of such reorganization proceedings, (b) at
the conclusion of such proceedings all outstanding
securities of such company were owned by creditors of
such company or by persons to whom such securities were
issued on account of creditors’ claims, and (c) more
than 50 per centum of the net asset value of such
company, and securities representing more than 50 per
centum of the net asset value of such company, are
currently owned beneficially by not more than
twenty-five persons; but such exemption shall terminate
if any security of which such company is the issuer is
offered for sale or sold to the public after the
conclusion of such proceedings by the issuer or by or
through any underwriter.
For the purpose of this paragraph, any new
company organized as part of the reorganization shall be
deemed the same company as its predecessor, and
beneficial ownership shall be determined in the manner
provided in Section 3(c)(1).”
We
solicit referrals to investments from the professional
community, including but not limited to bankers,
lawyers, accountants, broker/dealers, marketing and
business development professionals, venture capitalists
and money financiers.
We believe this marketing method will allow us to
maintain our focus on transactions that fit our
investment profile.
We do not intend to broadly solicit investment
opportunities, like investment bankers may do, or to
advertise for investment opportunities.
We believe we could be swamped with hundreds of
business plans and other “opportunities” in this
situation and we would spend ineffective time attempting
to select opportunities. We
believe our merchant banking strategy and the use of a
controlled amount of management assistance to protect
and build our investments may be particularly attractive
to banks and we expect to expand our marketing in that
direction. Banks
are very concerned about not only the legal exposure of
lender liability but the potentially adverse public
relations that accompany bankruptcy strategies and
aggressive restructuring, since these often have
negative employment impact (i.e. layoffs, etc.).
We believe that we may be able to purchase bank
loans at a significant discount and use our
entrepreneurial management and financial techniques to
create significant value over and above the purchase
price. With
respect to broker/dealers, venture capitalists and money
financiers, we believe our value creation strategies
would be attractive to these parties because they often
are not as attuned to smaller investments or to
investments, which may require intensive management
involvement to grow and manage the investment.
Lastly, wealthy individuals take investment
positions in small companies and then find that they
need aggressive and active management to protect and
maintain their investment. In some instances, we may acquire interests in Portfolio
Companies by swapping our own equity for such interests. |
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About our PrincipalsMichael S. Williams. Mike has been Chief Executive Officer and Chief Portfolio Officer of Aztoré Holdings, Inc. since 1995. Mike works full time on Aztoré activities. From December 1993 to December 1995, Mike (along with Lanny) founded and was a Managing Director of Bulldog Investment Company CLC. From November 1990 to December 1993, Mike was the sole principal of Bucher & Williams, a private investment and consulting company. From October 1987 to November 1990, Mike was the President, Chief Financial Officer and a Director of ShareData Inc. For the six years prior to October 1987, Mike was continuously employed in the securities business as an investment banker with various registered broker-dealers in Detroit, Michigan. Mike has an MBA degree in Strategic Planning and Corporate Finance from the Wharton Graduate School of the University of Pennsylvania and a BA degree in both History and Political Science from Pennsylvania State University. Lanny R. Lang. Lanny has been the Secretary, Treasurer and Chief Financial Officer of Aztoré since 1995 and has worked full time on Aztoré activities since this date. From December 1993 to December 1995, Lanny (along with Mike) founded and was a Managing Director of Bulldog. From July 1992 to December 1993, Lanny was the principal of Lang Financial Services, Inc., a private management and accounting consulting firm. From January 1986 to November 1990, Lanny was the Controller and Treasurer of SDI. Prior to joining SDI, Lanny was employed by Price Waterhouse in Minneapolis, Minnesota for six years. Lanny has a BA Degree in Accounting from the University of Northern Iowa. |
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