WRASP, A New and Better Way To Go WRASP, A New and Better Way To Go Public on NASDAQ and AMEXPublic on NASDAQ and AMEX

Presented by James E. HoschPresented by James E. HoschManaging Director, Investment BankingManaging Director, Investment Banking

WestPark Capital, Los Angeles, CAWestPark Capital, Los Angeles, CA

www.wpcapital.comwww.wpcapital.cominfo@wpcapital.cominfo@wpcapital.com

DC Finance IsraelAnnual Corporate Finance ConferenceNovember 22, 2010

Conference Package Handout Conference Package Handout MaterialMaterial

Conference Package Handout Conference Package Handout MaterialMaterial

Conference Package Handout Conference Package Handout MaterialMaterial

IntroductionIntroduction

Founded in 1999, WestPark Capital is one of the few remaining independent investment banks dedicated to emerging growth companies in the small and micro-cap market. Our independence enables us to maintain our focus on these companies, their entrepreneurial managers and their highly specialized financing needs.

WestPark Capital is a leading full-service investment bank dedicated to providing innovative, professional financial services to emerging growth companies. Our commitment to this segment of the market is unsurpassed and our success is founded on delivering solutions while providing the highest quality service.

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IntroductionIntroduction

Broad IndustryBroad Industry FocusFocus

• Technology

• Special Situations

• Software

• Financial Services

• Media & Telecom

• Medical Services

• Biotechnology

• Healthcare

WestPark focuses on emerging growth and middle market with the following characteristics:

Strong Management TeamStrong Management Team•Management has substantial equity interest in CompanyManagement has substantial equity interest in Company•Proven operating experienceProven operating experience

Sizable Market OpportunitySizable Market Opportunity•Market leadershipMarket leadership•Large addressable marketLarge addressable market•Market position: strong & defensibleMarket position: strong & defensible•Well developed, attainable business planWell developed, attainable business plan

Established PresenceEstablished Presence•Independent, industry and leadership experienced Board of DirectorsIndependent, industry and leadership experienced Board of Directors•Strong and supportive shareholders and sponsorsStrong and supportive shareholders and sponsors•Value-added strategic partnershipsValue-added strategic partnerships

Solid Financial FundamentalsSolid Financial Fundamentals•Existing or near-term profitabilityExisting or near-term profitability•Strong revenue, cash flow and net income growth potentialStrong revenue, cash flow and net income growth potential•Defined path to realization and appreciation of investors’ capitalDefined path to realization and appreciation of investors’ capital

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Recent TransactionsRecent Transactions

WRASP-APO

January 2010$3,500,000

ZST Digital Networks, Inc.

April 2010$24,000,000

Public Offering

Common Stock: $8.00 per Share

NASDAQ GM: ZSTN

WRASP

January 2010$26,000,000

China Electric Motor, Inc.NIVS IntelliMedia Technology

Group, Inc.

Common Stock: $3.29 per Share

NYSE Amex: NIV

October 2009$25,000,000WRASP

October 2008$4,900,000

WRASP-APO

Common Stock: $4.50 per Share

NASDAQ GM: CELM

WRASP-APO

May 2009$5,000,000

Yinlips Digital Technology, Inc.

WRASP-APO

October 2009$4,300,000

ZST Digital Networks, Inc.China Electric Motor, Inc.

China Intelligent Lighting and Electronics, Inc.

WRASP-APO

April 2010$5,400,000

China Century Dragon Media, Inc.

The Scope of a The Scope of a WRASPWRASP

A WRASP involves a comprehensive set of interrelated transactions managed by WestPark Capital, Inc. (“WestPark”), a FINRA-registered

broker-dealer.

A WRASP involves a comprehensive set of interrelated transactions managed by WestPark Capital, Inc. (“WestPark”), a FINRA-registered

broker-dealer.

A WRASP is a process in which a Company becomes publicly-traded through a reverse merger and trades directly onto a Senior Exchange such

as the New York Stock Exchange Amex (“NYSE Amex”) or NASDAQ.

A WRASP is a process in which a Company becomes publicly-traded through a reverse merger and trades directly onto a Senior Exchange such

as the New York Stock Exchange Amex (“NYSE Amex”) or NASDAQ.

W R A S W R A S PP

MINIMUM

Net Income:$5,000,000 in last fiscal year or in the last twelve months

(LTM)

Net Income Growth:

25% Year-Over-Year (YOY)

Market Capitalization (Valuation):

$50,000,000

WRASP Quantitative WRASP Quantitative RequirementsRequirements

Overview of a Overview of a WRASPWRASP

• The Operating Company merges with a fully-reporting Clean Shell.• Concurrent with the Shell Transaction, WestPark conducts a small

private placement ($3 million to $5 million).– This is in addition to any larger funding requirements.

• Listing Phase:– Stock symbol issued.– A second fund-raising, the amount of which varies from $5

million to $30 million.– Senior Exchange clears stock for trading.– Stock begins trading.

The Operating Company has two fundraising options after the completion of the shell merger and private placement:

– Track I) • To raise a lower amount ($4 million to $5 million) at the time

of trading followed by a substantial follow-on financing ($15 million and up),

-or-– Track II)

• To raise a larger amount of capital ($15 million to $30 million) at the time of trading.

• Eliminates the need for a follow-on fundraising in the near future.

WRASP Dual-Track WRASP Dual-Track FundraisingFundraising

Publicly-Reporting Operating Company

$3 million - $5 million

Small public offering

$3 million - $5 million

Large public offering

$15 million - $30 million

Fundraising$15 million & up

Post Private Placement and

Reverse Merger

Concurrent with Trading

Post Trading

Track II Example:China Electric

Motor, Inc.

Track I Example: NIVS IntelliMedia

Technology Group, Inc.

TRACK I

TRACK II

WRASP Dual-Track Fundraising WRASP Dual-Track Fundraising (cont.)(cont.)

The Company only trades on a senior exchange, which generally possesses superior:

– Liquidity– Research– Valuation– Institutional coverage

The initial fund-raising that closes concurrently with the reverse merger covers all the costs of the WRASP transaction and provides the Company with capital.

The shell is fully-reporting and has cleared SEC registration and never had operations.

The shell has been designed specifically for a WRASP transaction.

Advantages of a Advantages of a WRASPWRASP

STEP 1 STEP 2DAY

1 23 30 35 50 89 90

Merger

agreement

reviewed and

signed

8-K

disclosing

merger

prepared and

filed

Reverse

merger and

$3-5 million

private

placement

close

File with

senior

exchange,

FINRA, and

the SEC

Receive

comments

Issue

declared

effective by

the SEC

Stock begins

trading with

$10-30 million

raise

RECENT WRASP EXAMPLES

China Electric Motor, Inc. 10/06/09 01/29/10

ZST Digital Networks, Inc. 05/05/09 10/20/09

Timeframe of a WRASPTimeframe of a WRASP

Reverse Merger TransactionsReverse Merger Transactions

Advantages Of Going Public through a Reverse Merger with a Public Shell:

Allows a private company to go public

• Less Costs

• Less Time

• Less Dilution of ownership control

• Less Risk

Disadvantages Of Going Public through an IPO:

Additional risk

• The IPO may be withdrawn due to an unstable market condition, even after most of the up-front-costs have been expended.

IPO requires greater attention from top management

Reverse Merger TransactionsReverse Merger Transactions

The benefits of being a public company:

Increased liquidity of the ownership shares of the company

Higher share price and thus higher company valuation

Greater access to capital markets for possible future stock offerings

Enables the company to make acquisitions using stock

Ability to use stock incentive plans to attract and retain key employees

Tax advantages through the reverse mergers and proper exit strategies

WRASP Case WRASP Case StudyStudy

Profile for China Electric Motor, Inc. WRASP Transaction

China Electric Motor, Inc. (NASDAQ: CELM) engages in the design, production, marketing and sale of micro-motor products through their subsidiary Shenzhen YPC. Their products, which are incorporated into consumer electronics, automobiles, power tools, toys and household appliances, are sold under their “Sunna” brand name. The Company is focused on providing micro-motor products that meet the growing demand for efficient, quiet and compact motors. They produce both Direct Current motors and Alternating Current motors.

Transaction BackgroundChina Electric Motor, Inc. sold common stock at the purchase price of $2.08 per share with gross proceeds of approximately $4.0MM, whereby it concurrently closed on its merger with SKRP 21 through a WRASP transaction. On January 29, 2010, China Electric Motor, Inc. began trading on the NASDAQ under the ticker symbol CELM.

NASDAQ GM:CELMRTO/Private Placement Share Price$2.08Public Share Offering: $4.50Shares Outstanding (MM): 20.7Market Capitalization (MM): $109.0Total Capital Raised (MM):$30.0 As of October 12, 2010

NASDAQ GM:CELMRTO/Private Placement Share Price$2.08Public Share Offering: $4.50Shares Outstanding (MM): 20.7Market Capitalization (MM): $109.0Total Capital Raised (MM):$30.0 As of October 12, 2010

$4.0MM Private Placement closes concurrently with

RTOPrice $2.08

Private Private PlacementPlacement

$26.0MM Public Offering; Stock

trades directly on NASDAQ Global

MarketPrice $4.50

NASDAQNASDAQListingListing

Stock continues to trade on the NASDAQ

Global MarketPrice: $4.18 - $9.88

Stock Actively Stock Actively TradesTrades

$2.08

$9.88

October 2009

Average Daily Volume: 208,940*Average Daily Volume: 208,940*

October 2010

* Source: Capital IQ

January 2010

WRASP Case StudyWRASP Case StudyProfile for ZST Digital Networks, Inc. WRASP Transaction

ZST Digital Networks, Inc. (NASDAQ GM:ZSTN) develops, manufactures, and supplies digital and optical network equipment to cable system operators in the P.R.C. The company offers a range of cable television devices and related networking products, including Internet protocol television set-top boxes, which integrate Internet, multi-media, and communication technologies, and provide residential customers with high definition digital multi-media service, as well as facilitate to choose video programs offered by the network video providers on broadband IP network. The company was founded in 1996 and is headquartered in Zhengzhou, the People’s Republic of China.

Transaction BackgroundZST Digital Networks, Inc. sold common stock at the purchase price of $3.94 per share with gross proceeds of approximately $5.0MM, whereby it concurrently closed on its merger with SKRP 18 through a WRASP transaction. On October 20, 2009, ZST Digital Networks, Inc. began trading on the NASDAQ under the ticker symbol ZSTN.

NASDAQ GM:ZSTNRTO/Private Placement Share Price $3.94Public Share Offering: $8.00Shares Outstanding (MM):

11.6Market Capitalization (MM):

77.6Total Capital Raised (MM):

30.0As of October 12,2010

NASDAQ GM:ZSTNRTO/Private Placement Share Price $3.94Public Share Offering: $8.00Shares Outstanding (MM):

11.6Market Capitalization (MM):

77.6Total Capital Raised (MM):

30.0As of October 12,2010

$5.0MM Private Placement closes concurrently with

RTOPrice $3.94

Private Private PlacementPlacement

$25.0MM Public Offering; Stock

trades directly on NASDAQ Global

MarketPrice $8.00

NASDAQNASDAQListingListing

Stock continues to trade on the NASDAQ

Global MarketPrice : $4.43 - $11.90

Stock Actively Stock Actively TradesTrades

$3.94

$11.90

May 2009 October 2010

* Source: Capital IQ

October 2009

Average Daily Volume: 177,440*Average Daily Volume: 177,440*

Thank You!!

For further information, please contact:

WESTPARK CAPITAL, INC.

James E. HoschManaging Director, Investment Banking

jhosch@wpcapital.com