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February 2001


The Kriegsman Group - A full service investment and merchant bank
that starts companies with their own capital


The Kriegsman Group

11726 San Vicente Blvd., Suite 650
Los Angeles, California 90049
Phone: (310) 826-5449
Fax: (310) 826-5529


Steven A. Kriegsman

Interview conducted by:
Walter Banks, Co-Publisher

February 2001


CEOCFOinterviews - Mr. Kriegsman, can you tell us about the Kriegsman Group?

The Kriegsman Group is a firm based in Los Angeles and New York.  We pride ourselves on our expertise in technology.  In addition to working in information technology, environmental technology and related fields, we have a particular specialty in the health care field, including biotech, genomics, pharmaceuticals, medical devices, medical diagnostics, medical services and medical e-commerce.  In the nine years that we have been closing transactions in healthcare, we have achieved compounded returns of 85% per year.  For a nine-year period, that return may be the highest in the world.  We have been particularly successful in some of our top stocks, such as Closure Medical (NASDAQ: CLSR), in the medical device sector, and Novoste (NASDAQ: NOVT).  These stocks were ranked number 1 and number 10 in returns to investors in 1997.  In addition, we have worked with Advanced Tissue Sciences (NASDAQ: ATIS), with Miravant Medical Technologies (NASDAQ: MRVT), and with Maxim Pharmaceuticals (NASDAQ: MAXM).  All of these companies had a tremendous run in stock price appreciation

"We take a very analytical approach in looking at individual companies and studying the industry, but we are basically interested in undervalued firms.  Our specialty is finding companies with stock prices under $10-15.  We do merger and acquisition work; we arrange strategic alliances; we assist both public and private companies with raising equity and debt; we write research reports and help those companies in increasing shareholder value.  Additionally, we manage money, act as advisors to several fund groups and represent wealthy families interested in investing in the health care sector.  We have a number of excellent professionals in the company, including managing directors and analysts, many with very substantial educational backgrounds at some of the finest universities.  One of our key people is an M.D., M.B.A., Ph.D. out of Wharton and UCLA.  We are able to attract very talented people." 

"In addition to being a full service investment and merchant bank, we start companies with our own capital and move them along to an IPO or a private placement.  We recently invested and started a genomics company, which we think will become one of the most successful in the world.  We put in a total of $2 million, brought in a President, Chief Financial Officer, Chief Technology Officer, a blue chip Board of Directors, including a Nobel Laureate in Medicine, Dr. Louis Ignarro from UCLA.  The Vice Chairman of our Scientific Advisory board is Dr. Michael Hayden, one of the world’s leading genomics experts.  We think we will capture a tremendous amount of market share in the genomics field, which right now, is a very important field in biotech”.

CEOCFOinterviews - Will this be a public company?

Mr.Kriegsman: "Yes, we plan to go public shortly, either by merging into a public company or raising more money and doing it the conventional way. The name of the company is Global Genomics Capital, Inc. and I serve as the Chairman of the Board. The full Board of Directors, Board of Advisors, management team, and all the principals have made investments in the company. We have already bought 40% of a company in Minneapolis, which has a very unique technology in the DNA area. The company’s name is Blizzard Genomics, very apropos for Minneapolis since the weather is so bad there.  We intend to purchase additional companies in the near future. We have been working on that project for about two years, and although it is still early in the game, we will become a leading force in genomics."

CEOCFOinterviews – Please tell us about some of the companies that you cover?

Mr.Kriegsman: "We have looked at the 2001 market and are very hot on certain dramatically undervalued companies.  One of them is HEARx (AMEX: EAR), and their stock is now at about $2. It is the third leading provider of hearing care in the USA with about 80 retail centers located in three regions representing a $600 million market. Through a carefully executed strategy, the company has developed a reputation for providing quality hearing care in its own hearing care centers and it has become a dominant provider of hearing care in the regions that it services. We think HEARx could be at least an $8 stock within a year."

"Another company we like very much is Supergen, (NASDAQ: SUPG), founded by Dr. Joe Rubinfeld, who was also one of the founders of Amgen. Supergen has completed Phase III trials for a pancreatic cancer treatment. If you have pancreatic cancer, there is a 99% chance that you will die within 4-6 months. It is a terrible and fatal disease.  Supergen has a compound called Rubitecan, which we hope will be approved by the FDA, that extends the life of patients with pancreatic cancer. The company is also in Phase III trials for treatments of other forms of cancer. Supergen could be a $50-100 stock in the next 12 months." 

"Miravant Medical Technologies (NASDAQ: MRVT) is also currently very undervalued. Their stock has come down from about $30 to only $8.  This company has probably the best technology in the world to treat age related macular degeneration. We expect their product to reach the market next year and it could be the leading product in the world."

"Then there is Cytomedix (OTC BB:CYDX). They have a patented technology for wound closure. If you have diabetic ulcers and face amputation, their product will let you avoid drastic surgery. I think this company is very undervalued at about $3. They need to raise additional capital and have been successful in doing so in the past. They have agood management team and I think their stock will rebound tremendously."

"Also, there is Siga Technologies, (NASDAQ: SIGA) a leading company in vaccines. They are a very interesting, early stage company with very good technologies and undervalued at $3."

CEOCFOinterviews – What is your thoughts on the management team of

Mr.Kriegsman: "Dr. Paul Brown is the principal executive at HEARx. He was Chairman and Chief Executive Officer of Metpatch, which was sold to Corning Glass for $140 million in l982. He is a graduate of Harvard, with an M.D. from Tufts.  Paul is a brilliant executive, and he and his management team can build HEARx into a major company. We think that ultimately HEARx will either make a substantial number of acquisitions or will be acquired at a very significant price. And, we think that its stock is one of the most undervalued in America right now."

CEOCFOinterviews - How does HEARx market their product?

Mr.Kriegsman: "They are basically doing retail hearing care in their centers. There are 33 of them in Florida, 13 in New York, 15 in New Jersey and 19 in Southern California. Their headquarters are in West Palm Beach, Florida.  They cater to patients whose health insurance and managed care organizations have contracted with them for such care, and to retail self-paying patients."

CEOCFOinterviews - What does HEARx have to do to grow?

Mr.Kriegsman: "I think they will make some key acquisitions, some strategic alliances, and open more centers. They know how to manage their centers and their revenue base is growing dramatically. This year it could grow 40% . We project that they are going to be very profitable in the year 2002 doing about $87 million in revenue and earning about $5 million in after tax profits. The stock is now worth about $20, yet it is selling for about $2. A company growing that fast could be worth at least $250 million, yet it is only worth $20 million now."

CEOCFOinterviews – What is the outlook for the medical e-commerce

Mr.Kriegsman: "The e-commerce market has been devastated, all the stocks have gone down almost next to nothing and many companies have faced bankruptcy. I think the problem with the e-commerce marketplace is shareholders that bought stock, did not actually understand how difficult it is going to be to penetrate the medical marketplace. Doctors are very busy servicing their patients and do not have the time to be on their PCs, and their staff is not necessarily adept at working with computers. I believe that there was also a great deal of hype in terms of what could be done in the medical and health care fields. Many companies jumped on the bandwagon and at the end, it was the emperor's new clothes. There are no clothes and they are basically naked.  Most of the companies are naked in this field and will be lucky to survive.  I am conservative when it comes to e-commerce in healthcare; I am not sure who is going to make it.  A lot of money has been thrown at WebMD, and they have tremendous problems.  Whether they can make it at this point is debatable. I think it will work for anybody who can dominate the market, who can develop great products that people want at a good price, and who can get doctors, patients, hospitals, and health care facilities using their systems and make a profit. However, I think there will be, and has been, a tremendous shakeout in the field and I am not sure what or how many, if any, are going to make it in the e-commerce field. Before going into a deal in e-commerce, I would do an extraordinary amount of
competitive analyses and due diligence.  If through doing this research, we can find the few companies that will survive and succeed, then we would do very well."

CEOCFOinterviews – What final thought would you like to leave with the investment community?

Mr.Kriegsman: "We love the health care space, because you can save a lot of lives and also make a lot of money.  I think that working in health care and investing in health care is about the best place to be. If you invest in a company like HEARx, which improves the quality of life for many, contributes to community economies, and is also financially successful, you can be sure that it will be a sound investment."


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