Strategy

The Stellar Venture Capital fund uses the basic principles Mr. Schmidt has used to uncover entrepreneurial, turn around opportunities and to identify investments in public companies that are well positioned for highly profitable "Stellar" returns.

Scope of Investment Activity
SVP plans to invest primarily in new and developing privately- or publicly-owned companies. It may also invest in more mature or established companies in which the potential exists for exceptional capital appreciation. In all cases, likelihood of future capital appreciation or income generation will be the main criteria for evaluation.

While SVP will generally participate in early and later stage financing of existing businesses, we will also actively consider investment in the exploratory or startup phase of companies in which management and other key elements are not yet in place, but the potential for growth appears to be great upon implementation of a path-to-profitability (P2P) strategy. In such circumstances SVP will often play a significant role in identifying and attracting management and developing the Client Company's business plan.

Shortening the Path to Profitability (P2P)
To speed up profitability, a business incubator has already been formed. Stellar Business Builders, LLC will allow companies to benefit from an economy of scale through shared office space, accounting services, computers, and other resources, thereby reducing start-up costs and quickening the path to profitability. It is projected that 6-10 companies per year will be launched through the incubator.

Geographic Focus
The Southeastern U.S. is a fast-growing region with numerous opportunities and a variety of new business potential. Therefore, a concentration of business assistance programs will geographically focus on this region. This will facilitate hands-on supervision in an area of greatest familiarity to the management team.

Industry Focus
The overall concentration will be on technology-related businesses. This may include businesses that are not technology-based, but can realize accelerated growth through the adaptation of e-business, Internet presence, and Internet marketing strategies. Consideration will also be given to existing ventures that plan expansion through additional investments in technology.

Joint ventures with other V.C. firms around the country will also be considered in order to geographically expand the opportunities available to the fund and its investors, and to offer maximum value to our Client Companies, and our investors through diversification.

Structuring Investments
It is expected that Stellar Venture Partner investments will be made through privately negotiated transactions. The fund Manager will be responsible for conducting these negotiations on behalf of SVP and will seek to structure the investment to identify a win-win balance which will provide for the capital needs of our Client Companies while maximizing SVP's investment opportunity. Important terms such as price, type of security, restrictions on use of funds, commitments or rights to provide additional financing, involvement in the operation of the business and liquidity will be addressed by the Manager in each investment.

SVP investments will usually take the form of common or preferred stock or senior debt securities with equity features such as convertibility to common or attached warrants to purchase common stock. The duration of each investment will be based upon a reasonable time for optimized performance within the Client Company to achieve maximum return to our investors. The investments in new and developing companies will be made in private transactions with privately- and publicly-owned companies.

Investment Size
The size of the initial Investment commitments in any one Portfolio Investment may vary greatly, but in general the Manager expects these investments to be in the range of $100,000 to $1,000,000.