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Neural Capital   Information Package   April2009
Neural Capital   Information Package   April2009
Neural Capital   Information Package   April2009
Neural Capital   Information Package   April2009
Neural Capital   Information Package   April2009
Neural Capital   Information Package   April2009
Neural Capital   Information Package   April2009
Neural Capital   Information Package   April2009
Neural Capital   Information Package   April2009
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Neural Capital Information Package April2009

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Neural Capital Information Package April2009

Neural Capital Information Package April2009

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  • 1. NEURAL CAPITAL INFORMATION PACKAGE 31 March 2009
  • 2. NEURAL CAPITAL An Overview of Neural Capital INFORMATION PACKAGE 31 March 2009 Neural Capital was Founded in November 2005 to trade its own capital in the financial markets and to start the Neural Fund. Neural Capital also works with green field projects, start ups and early stage companies in a variety of industries to help them raise capital from institutional investors like venture capital funds and private equity funds. Neural Capital is incorporated in the State of Delaware and the company’s Principal Office is located in Delray Beach, Florida. The company also works closely with its sister companies in India, Neural Trading Strategies in New Delhi and Neural Technologies and Software in Mumbai. In addition we have a working relationship with the Harvard Capital Group in Los Angeles, with Praxis Advisors in Mumbai and Risk Training in Munich, Germany. The firm has developed two proprietary trading strategies to trade the financial markets: 1. The Neural Trader, that used artificial intelligence techniques such as neural networks and genetic algorithms. Th core i ll l ih The intellectual property underlying the N l d l i h Neural T d h d resulted i the f l Trader had l d in h formation i of a new hedge fund management company called Delray Capital Management. 2. The Silver Box, a statistical arbitrage trading strategy to trade equity indices like the S&P NIFTY Neural Capital’s Founder and CEO has long standing relationships with Presidents, Chief Investment p g g p , Officers, CEOs and senior Partners in various private equity funds in the United States, Europe and Asia (particularly in India). These relationships enable us to access deep pockets of institutional capital. Confidential and ©Neural Capital LLC Page 2
  • 3. NEURAL CAPITAL INFORMATION PACKAGE 31 March 2009 Section 1 Venture Capital and Private Equity Page 3 Confidential and ©Neural Capital LLC
  • 4. NEURAL CAPITAL VENTURE CAPITAL AND PRIVATE EQUITY Venture Capital and Private Equity for early stage companies INFORMATION PACKAGE 31 March 2009 Neural Capital has advised the following start ups, early stage firms and green field projects on raising capital f i l from venture capital f d and private equity fi i l funds d i i firms: DE COPIER TECHNOLOGIES and NANO SOLUTIONS Inc,– a Massachusetts based company in the specialty chemicals business that had patented chemical technologies for removing the i k of l i h ink f laser printers and photocopying machines f i d h i hi from printed sheets of paper i d h f RAY AEROSPACE – a Connecticut based start up company that is in the aerospace component manufacturing business ADVANCED PHOTO VOLTAICS – a California based start up company that is in the solar technology and advanced solar cells business FORT DOX Inc – a Florida company that is in the business of scanning and storing documents for mortgage and title insurance companies in digital format that can be retrieved from anywhere in the world using the internet APTIVAA CONSULTING – a Risk Management solutions company with business in India, Europe and the Middle East that is looking to expand in North America Confidential and ©Neural Capital LLC Page 4
  • 5. NEURAL CAPITAL VENTURE CAPITAL AND PRIVATE EQUITY Neural Capital’s approach towards capital raising INFORMATION PACKAGE 31 March 2009 Raising capital for green field projects, start ups and early stage companies is a very challenging and arduous task. It is no wonder that the Wall Street investment banks prefer to work on raising capital for large and established companies rather than for start ups and early stage companies. Neural Capital believes that each start up is different and that there is no “one strategy that fits all” when trying to raise capital for early stage companies. Therefore, we do not work for a start up or for a green field project. Instead we work with them and their senior management team. We address each deal independently with a tailor made strategy, that follows a targeted approach rather than a machine gun approach Neural Capital deploys a very active and hands on methodology towards capital raising. We enhance the clients’ existing business plan in order to tailor it to the requirements and investment goals of private equity investors. We also advise on company valuations, appropriate corporate and financial structure so that the capital raising goals of the client(s) can be achieved. We W speak di k directly to CEO and S i P l CEOs d Senior Partners at venture capital or private equity fi i l i i firms with whom we ih h have relationships that go back to the school, college or business school days of Neural Capital’s Founder and CEO. Such relationships are key to establishing an ongoing dialogue with a potential institutional investor and thereby taking the deal forward. The process is best described as being painstakingly arduous and persistence, perseverance and patience are k to success. i ki l d d i d i key Confidential and ©Neural Capital LLC Page 5
  • 6. NEURAL CAPITAL VENTURE CAPITAL AND PRIVATE EQUITY Private Equity and Infrastructure firms where our clients have INFORMATION PACKAGE been introduced for capital raising and business development 31 March 2009 Private Equity Firms Infrastructure Firms IDFC Private Equity, Mumbai EMMAR MGF, New Delhi ICICI Ventures, Mumbai PERI India ICICI Foundation / IFMR Trust, Chennai BL Kashyap and Sons, New Delhi Red Fort Capital, New Delhi BTPT, New Delhi Beekman Helix, McLean, VA and Gurgaon Lodha Group, Mumbai New Silk Route Advisors, Mumbai Supreme Infrastructure, Mumbai Westport Capital, Mumbai Shapoorji, Mumbai ACTIS Private Equity Piedmont Development, Gurgaon Infinite India Investment Management Marg Constructions, Chennai Aquarius India Fund, Singapore / Bangalore Alliance Group, Bangalore Larsen & Toubro, Mumbai This list is for illustrative purposes only. It is by no means an exhaustive list of institutional investors or firms with whom we work Confidential and ©Neural Capital LLC Page 6
  • 7. NEURAL CAPITAL VENTURE CAPITAL AND PRIVATE EQUITY Neural Capital’s fees for raising capital INFORMATION PACKAGE 31 March 2009 Keeping in view our tailor made approach towards the exercise of raising capital for each client, we also structure our fees differently for each transaction. Our fees vary from transaction to transaction and is a combination of: 1. Annual cash retainer 2. Success fees payable in cash as a percentage of the capital raised; and 3. Success f 3 S cc fees p bl thr payable through equity p rticip ti n or warrants h q it participation r rr nt The fees are negotiated and agreed upon through a written agreement. We nn t t t nt tin investors without a written agreement. Th in tit ti n l in t W cannot start contacting in t ith t itt n nt The institutional investors th t we that speak to will look at the transactions that we bring to them only if we have a mandate from the issuer. We work as long term partners with our clients rather than on one off transactions. Confidential and ©Neural Capital LLC Page 7
  • 8. NEURAL CAPITAL INFORMATION PACKAGE 31 March 2009 Section 2 Founder’s Experience in Capital Markets At Lehman Brothers. Merrill Lynch and Citigroup y g p Page 8 Confidential and ©Neural Capital LLC
  • 9. NEURAL CAPITAL FOUNDER’s EXPERIENCE IN CAPITAL MARKETS Debt Capital Markets Transactions INFORMATION PACKAGE 31 March 2009 at Lehman Brothers, London and Merrill Lynch Capital Markets, HK CLIENT DEAL SIZE TYPE OF DEAL DEAL STRUCTURE Republic of Italy US$ 1 billion Global Bond Issue Global bond issue and simultaneous re-structuring of liability portfolio which included international bonds issued in US Dollars, Sterling, ECU, Yen, Deutsche Marks and French Franc. Identified potential savings of US$ 30 million for the Republic of Italy. Kingdom of US$ 500 Global Bond Issue Global bond issue including bond-buy backs through tender offers. Belgium million European US$ 500 Global Bond Issue Global bond issue along with simultaneous re-structuring of their liability portfolio involving bond-buy Investment Bank million backs through tender-offers. Indian Oil US$ 250 Eurobond issue Two-tranche, 5 year and 7 year maturity Corporation million Korea Electric US$ 450 Eurobond issue US$ 450 million Eurobond issue along with the exercise of put options on their outstanding bonds which Power million resulted in cheaper re-financing. Corporation Industrial Credit US$ 25 Euro Bond issue (Co- 7-year Euro bond issue prices at 150 over T-Bond curve & Investment million Managers) Corp of India C f I di Industrial US$ 25 FRN issue (Co- 7-year FRN issue priced at 6-month US$ Libor + 82.5 bp Development million Managers) Bank of India Asian US$ 650 Hybrid bond issue The bonds had a principal guarantee from the ADB (rated AAA) and a coupon guarantee from ONGC (rated Development million Yankee and Euro BB+). This reduced the new issue spread on this structured 12-year bond issue from 350 basis points over Bank and ONGC 10-year US Treasuries to 170 basis points Republic of China US$ 1 billion Global bond issue 10-year maturity Confidential and ©Neural Capital LLC Page 9
  • 10. NEURAL CAPITAL FOUNDER’s EXPERIENCE IN CAPITAL MARKETS Structured Derivative Products for Institutional Investors INFORMATION PACKAGE 31 March 2009 at Lehman Brothers, London CLIENT DEAL SIZE TYPE OF DEAL DEAL STRUCTURE Baring Asset Mgt, US$ 10 Option embedded Structured investments linked to Italian Lira swap rates London million MTNs Springfield Asia, US$ 5 million FX Coupon = IDR 27% or 10% or 0.00% depending upon IDR/US$ range Hong Kong Digital/Pyramid Note Nissho Iwai, Japan US$ 70 Diff. Swap Unwind of structured and leveraged deal indexed to the spread between 10-year Swedish Kroner swap rates million and 10-year Danish Kroner swap rates. PT Ispat Indo, US$ 50 Portfolio Hedge Hedging of US Treasury Bond portfolio through structured swaps and options on US long bond. Jakarta million Overseas China US$ 8 million Re-structuring of * 10 times leveraged swap indexed to DEM, FRF and GBP swap rates Bank, Taiwan US$ 9 million structured US$ 16 interest rate * 10 times leveraged swap indexed to 3 month CAD (4 deals) million US$ 8 swaps million * 15 times leveraged swap indexed to 3 month ECU and GBP * 10 times leveraged swap indexed to DEM, FRF and GBP swap rates KS Global Fund, US$ 200 Structured notes Coupon = 12 months Yen Libor + 101.80 US$ put, Yen call K/O 102.80, Hurdle 91.80 Tokyo million Toshoku, Japan US$ 49 Structured notes Coupon = 12 month Yen Libor + 102.30 US$ put, Yen call K/O 104.30, Hurdle 92.30 million Fuji Oil, Japan US$ 50 Inverse Floaters Coupon = strike - 6 month ITL Libor million Nippon Sanso, US$ 58 Inverse Floaters Coupon = strike - 6 month ITL Libor Japan million Confidential and ©Neural Capital LLC Page 10
  • 11. NEURAL CAPITAL FOUNDER’s EXPERIENCE IN CAPITAL MARKETS Structured Derivative Products for Corporate Clients INFORMATION PACKAGE at Lehman Brothers, London and Merrill Lynch Capital Markets, HK 31 March 2009 CLIENT DEAL SIZE TYPE OF DEAL DEAL STRUCTURE British Aerospace US$ 400 Structured interest Re-structuring Re structuring of debt portfolio using interest rate options and swaps at a time when US interest rates were million rate swap very low and the yield curve was very flat. Air India US$ 350 Jet Fuel Linked Bond issue with embedded jet fuel oil put options to finance the purchase of new Boeing 747s under a million Financing partial guarantee from the US Exim Bank. Industrial Finance Yen 40 Cross currency Cross-currency Swap unwind. unwind Corporation of billion interest rate swap India General Electric US$ 10 Emerging market 1 year deal indexed to non-deliverable Indian Rupee forwards. This deal was designed to hedge General Capital Corp. million hedge Electric’s exposure to investments to India. Hanil Bank, Korea US$ 100 , $ Eurobond issue Structured financing swap with embedded digital FX options to reduce their cost of funding from 50 basis f g p g p ff gf million with financing points over 6-month US$ Libor to 35 basis points. swap EGAT, Thailand Yen 50 Cross-currency Yen fixed rate swapped into US$ floating rate billion Interest Rate Swap Air India US$ 650 Structured interest Structured deal to swap a portfolio a floating rate loans into one fixed rate liability to hedge US$ interest p p f f g f y g million rate swap rate risk. PT Sinar Mas US$ 25 Various structured Unwinding of US$/Yen and US$/DEM knock-out Options Group Treasury, million deals Jakarta Structuring of US$ floating rate liabilities into Yen Floaters through structured swaps US$ 90 million Confidential and ©Neural Capital LLC Page 11
  • 12. NEURAL CAPITAL FOUNDER’s EXPERIENCE IN CAPITAL MARKETS Alternative Investment Strategies – Hedge Funds and CDOs INFORMATION PACKAGE At Citibank Global Asset Management, London and Lehman Brothers 31 March 2009 CLIENT DEAL SIZE TYPE OF DEAL DEAL STRUCTURE Postipankki Bank US$ 450 Mortgage Backed Re structuring Re-structuring and hedging of the Mortgage Backed Securities Portfolio using caps, floors and swaptions. caps swaptions Finland million Securities Various Investors US$ 150 Participating Collateralised Bond Obligation with Principal and Contractual Coupon rated A2 by Moody’s. million Obligations Without Residuals Unrated Contingent coupon that is dependent upon cash flows from High Yield Bond Portfolio aith average rating of B1 Various Investors US$ 350 Captiva CBO - I Collateralised Bond Obligation with Senior Tranche rated A2 by Moody’s and wrapped with a CAPMAC million guarantee Equity tranche unrated with a targeted return of 14%. Various Investors V i I US$ 300 Captiva C i CLO - I Collateralised Loan Obligation with Senior and Junior Tranches C ll li d L Obli i ihS i dJ i T h million Various Investors US$ 500 Legion Fund and The Legion Funds and Alpine Select were fund-of-hedge funds that were created by Citibank Global Asset million Alpine Select Management out of the San Fransisco office and marketedto institutional investors in Europe, the Middle East and Asia. Banque Brussels US$ 1 billion Asset Backed Tax Portfolio of Loans made to China, India and the Philippines re-packaged and sold to Banque Brussels Lambert Driven Credit Lambert with a credit derivative to back the transaction. The deal was driven by tax considerations. Derivative Asea Brown CHF 13 Hedging of Credit Derivative for electricity projects in India Boveri, Switzerland million Credit/Default Risk Sumitomo Bank, US$ 150 Hedging of Credit Credit Derivative for hedging their loan portfolio in Indonesia Singapore million risk Confidential and ©Neural Capital LLC Page 12
  • 13. NEURAL CAPITAL FOUNDER’s EXPERIENCE IN CAPITAL MARKETS Corporate Finance and M&A INFORMATION PACKAGE At Booz.Allen & Hamilton Sydney and for Bankers Trust Asset Mgt 31 March 2009 CLIENT DEAL SIZE TYPE OF DEAL DEAL STRUCTURE TELSTRA, US$ 1 billion Cross Border M&A Advised TELSTRA on the valuation of VSNL – India’s sole International Telecom operator. Negotiated a Australia cross-border M&A deal with VSNL and the Foreign Investment Promotion Board of India on behalf of Telstra. Deal was not consummated because the Foreign Investment Promotion Board refused permission And VSNL, India for a foreign entity to take a majority stake in VSNL. Performed cash flow modelling and valuation of VSNL and worked closely with the senior management of both sides. sides Mid Sized Indian US$ 15 PIPES Private placement of equity with Bankers Trust Funds Management, Sydney. The company was listed on Petrochemicals million the Mumbai Stock Exchange. company Commonwealth C lth Business B i Restructuring f th b k’ d R t t i of the bank’s domestic retail branch network prior to privatisation as part of a team of ti t il b h t k i t i ti ti t f t f Bank of Australia Restructuring prior management consultants from Booz.Allen & Hamilton, Sydney. to Privatisation Confidential and ©Neural Capital LLC Page 13
  • 14. NEURAL CAPITAL INFORMATION PACKAGE 31 March 2009 Section 3 Quantitative Trading Strategies and their Performance Page 14 Confidential and ©Neural Capital LLC
  • 15. NEURAL CAPITAL QUANTITATIVE TRADING STRATEGIES Neural Capital’s Quantitative Trading Strategies INFORMATION PACKAGE 31 March 2009 Neural Capital has developed the following quantitative trading strategies for the financial markets: THE NEURAL TRADER A neural network b d t di strategies f t di TRADER: l t k based trading t t i for trading: Currency Markets (e.g. Australian $, British Pound, Swiss Francs) Agricultural Commodities (e.g. Wheat, Coffee, Corn,) Metals (e.g. Gold, Silver, Platinum) Energy M k ( Natural Gas, Crude Oil, H i Oil U l d d gasoline) E Markets (e.g. N l G C d Oil Heating Oil, Unleaded li ) Stock Indices (e.g. S&P 500, NASDAQ 100, NIKKEI 225) Interest Rate Markets (e.g. 10 year US Treasury Note) THE SILVER BOX: A statistical arbitrage trading strategy that has been used to trade: The Th equity i d f i index futures traded on the N i d d h National S k E h l Stock Exchange of I di f India Signals from these quantitative trading strategies are used for proprietary trading at Neural Capital Neural Capital has also been working on the creation of the “Neural Fund” to manage money p g g y based upon the signals generated by the above mentioned quantitative trading strategies Confidential and ©Neural Capital LLC Page 15
  • 16. NEURAL CAPITAL The NEURAL TRADER The NEURAL TRADER INFORMATION PACKAGE 31 March 2009 An Artificial Intelligence trading strategy Long/Short artificial intelligence based trading strategy for highly liquid global futures markets equity indices fixed income metals energy agricultural commodities Five times Leverage Low Correlation with market index - S&P 500 High Positive Alpha Sharpe Ratio > 2 Highly scalable: Neural Trader is scalable to around US$ 1 billion Actual return of 41.49% (Annualized Return 60.44%) during live trading from August 2004 to March 2005 through Susquehanna International Group, Philadelphia. Peak return was 50% US$ 5 million was traded at Delray Capital Management LLC from October 2005 to September 2006 with an actual return of 33.48% and a peak return of 39.83% Confidential and ©Neural Capital LLC Page 16
  • 17. NEURAL CAPITAL The NEURAL TRADER Overview of the Live Test in financial futures INFORMATION PACKAGE 31 March 2009 The Neural Futures Trader was used for trading the following markets from 3 Aug 2004 to 3 April 2005 Currency Futures (Australian $, British Pound, Swiss Francs) Agricultural Commodity Futures (Wheat, Coffee, Corn,) Metal Futures (Gold, Silver, Platinum) Energy Futures (Natural Gas, Crude Oil, Heating Oil, Unleaded gasoline) Stock Index Futures (S&P 500, NASDAQ 100, NIKKEI 225) Interest Rate Futures (10 year US Treasury Note) This 8 month live test was sponsored by the Susquehanna International Group Philadelphia (www.sig.com) During the live test: Trading signals from the Neural Futures Trader were sent by Rajat Bhatia to the execution trader at Susquehanna prior to the start of each trading day All trades were executed at the best available market price near the opening of the markets in the USA p p g Performance was monitored continuously and all trades were recorded and reconciled by both Susquehanna and Rajat Bhatia A detailed analysis of trading performance was conducted which is presented on the following pages Confidential and ©Neural Capital LLC Page 17
  • 18. NEURAL CAPITAL The NEURAL TRADER NEURAL TRADER’s Actual Trading Performance INFORMATION PACKAGE 31 March 2009 from 3rd August 2004 to 3rd April 2005 Confidential and ©Neural Capital LLC Page 18
  • 19. NEURAL CAPITAL The NEURAL TRADER NEURAL TRADER’s Performance in each market INFORMATION PACKAGE Without stop losses 31 March 2009 rical results are NOT a guaran for future performance. Note: Histor ntee p Confidential and ©Neural Capital LLC Page 19
  • 20. NEURAL CAPITAL The NEURAL TRADER NEURAL TRADER’s Equity Curve and Drawdown INFORMATION PACKAGE Without stop losses 31 March 2009 rical results are NOT a guaran for future performance. Note: Histor ntee p Confidential and ©Neural Capital LLC Page 20
  • 21. NEURAL CAPITAL The NEURAL TRADER NEURAL TRADER’s Winning and Losing trades in each market INFORMATION PACKAGE 70% of all trades were positive trades 31 March 2009 rical results are NOT a guaran for future performance. Note: Histor ntee p Confidential and ©Neural Capital LLC Page 21
  • 22. NEURAL CAPITAL The NEURAL TRADER NEURAL TRADER’s Performance at Delray Capital Mgt. INFORMATION PACKAGE Actual t di performance f A t l trading p f from O t b 2005 to S pt b 2006 October t September 31 March 2009 Based upon the performance of the Neural Trader, a new hedge fund management company called Delray Capital Management LLC was set up and it traded US$ 5 million from October 2005 to September 2006. Rajat Bh ti h ld R j t Bhatia held an equity stake in Delray Capital Management through Dr. J im D rm d it t k i D lr C pit l M m t thr h Dr Jaime Dermody. Confidential and ©Neural Capital LLC Page 22
  • 23. NEURAL CAPITAL The SILVER BOX THE SILVER BOX INFORMATION PACKAGE A statistical arbitrage trading strategy 31 March 2009 The Silver Box is a statistical arbitrage trading strategy based upon the paradigm that individual stocks and their related securities often move in tandem. Neural Capital has developed a proprietary algorithm that analyzes the statistical relationship between a stock and its related securities Related securities include futures, options, convertibles, ADRs, GDRs etc. Based B d upon the statistical relationship, d il b or sell signals are generated f h i i l l i hi daily buy ll i l d from the models h d l All trades are executed at or near the Open price of the stock All trades are squared off at or near the Close price of the stock There is no overnight risk as positions are closed out at the end of each day High Hi h returns occur i volatile markets, especially i b in l il k i ll in bear markets k The Silver Box has been applied to the Indian equity markets and the algorithms are extendable to other international equity markets such as: Asia Pacific: Japan, South Korea, China, Taiwan, Australia Europe: Finland, France, Germany, Greece, Holland, Italy, Ireland, Spain, Switzerland, United Kingdom Africa: South Africa Confidential and ©Neural Capital LLC Page 23
  • 24. NEURAL CAPITAL The SILVER BOX THE SILVER BOX – Trading Process INFORMATION PACKAGE 31 March 2009 Historical Stock Price Data RESEARCH Daily Stock Prices MODEL Develop PRODUCTION Historical Prices of MODEL Daily Prices of Related Securities Proprietary Related Securities Algorithms for each stock based Proprietary Historical Prices of upon statistical Daily Prices of Algorithms Major Market relationships Market Indices Indices SILVER BOX ONE: SILVER BOX TWO: Daily Daily Trading Signal for Trading Signal for major each stock market Indices Capital Allocation Daily P/L monitoring, Risk Management, Performance Reporting Confidential and ©Neural Capital LLC Page 24
  • 25. NEURAL CAPITAL The SILVER BOX THE SILVER BOX INFORMATION PACKAGE Actual trading performance with real money 31 March 2009 Neural Capital started trading the signals from The Month Capital Invested in P/L for Month Return for Average Silver Box on 16 October 2006 with an initial capital Trading Account Month Leverage contribution of Rupees 0.5 million OCT 2006 INR 500,000 (INR 5,213) -1.0% 2.41 Effective, 02 January 2007, the capital invested in the NOV 2006 INR 500,000 (INR 49,876) -10.0% 4.96 strategy was increased from Rupees 0.5 million to DEC 2006 INR 500,000 INR 149,611 29.9% 6.89 Rupees 1 5 million 1.5 JAN 2007 INR 1 500 000 1,500,000 INR 265 963 265,963 17.7% 17 7% 4.81 4 81 TRADING PERFORMANCE from 16 October 2006 FEB 2007 INR 1,500,000 INR 505,940 33.7% 8.84 to 04 April 2007: MAR 2007 INR 1,500,000 INR 11,641 0.8% 4.30 Actual return of 84% INR 1,500,000 INR 199,018 13.3% 4.42 APR 2007 Sharpe Ratio = 4 46 4.46 Number of Trades = 52 Winning Trades = 73% Since 04 April 2007 trading has continued at Neural Capital but the signals from the Silver Box were not properly executed by the execution trader based in India who frequently over rode the trading signals with his own judgment and view on the Indian market. Nevertheless, from 16 October to August 2007, Neural Capital has achieved an actual return of 105% trading the S&P Nifty Index Futures and stock futures on some individual stocks listed on the National Stock Exchange During the same period major hedge funds around the world have blown up - such as the two Bear Stearns hedge funds (total losses US$ 1.6 billion) while other hedge funds run by Goldman Sachs such Global Alpha are down 27% (total losses more than US$ 2 billion) and needed a bail out of US$ 3 billion. Confidential and ©Neural Capital LLC Page 25
  • 26. NEURAL CAPITAL The SILVER BOX THE SILVER BOX INFORMATION PACKAGE 31 March 2009 Unleveraged Back Test Performance Statistics - Aug 2001 to Oct 2008 IMORTANT: Please note that these are Back Test results and that actual trading performance will vary from these numbers. In particular, an important input to the back test is the Open p y p , p p p price of the S&P Nifty Index futures. The Open price printed by the National Stock Exchange is often not tradable and it is very difficult to execute at the Open Price. This slippage can be very significant on days when the Signal from the Silver Box is very strong. We do not have the data to measure that slippage and hence no reliance should b b d upon these b k tests to make i li dh li h ld be based h back k investment d i i decisions. Confidential and ©Neural Capital LLC Page 26
  • 27. NEURAL CAPITAL INFORMATION PACKAGE 31 March 2009 Section 4 Management Team Page 27 Confidential and ©Neural Capital LLC
  • 28. NEURAL CAPITAL Management Team of NEURAL CAPITAL Overview of our MANAGEMENT TEAM INFORMATION PACKAGE 31 March 2009 The Management Team of Neural Capital has a combined experience of several years in the global financial markets covering corporate finance, M&A, venture capital, private equity, treasury risk management, d i iderivative products, h d i d hedging strategies, quantitative trading strategies, artificial i i i di i ifi i l intelligence, statistical arbitrage, risk management, funds management, information technology and quantitative analysis. NEURAL CAPITAL Rajat Bhatia Founder & CEO Mahendra Mehta, PhD Mark Needles, PhD Jaime C. Dermody, PhD Ranjan Chakravarty PhD Dan Graham Head of Head of Head of Head of Head of Artificial Intelligence f g Q Quantitative Analysis y Investor Relations g Risk Management Information Technology Page 28 Confidential and ©Neural Capital LLC
  • 29. NEURAL CAPITAL Management Team of NEURAL CAPITAL Rajat Bhatia INFORMATION PACKAGE 31 March 2009 Founder & CEO Rajat Bhatia is the Founder & CEO of Neural Capital. He has worked as an international investment banker for many years and has a wide range of experience in the global financial markets that includes corporate finance, M&A, M&A venture capital raising, private equity, IPO h d f d d i i products, quantitative trading strategies i l i i i i IPOs, hedge funds, derivative d i i di i and financial modeling.. During his professional career of twenty years, Rajat has worked with the following international banks and consulting firms: Citibank Global Asset Management, Alternative Investment Strategies, London Lehman Brothers International, Global Derivative Products Group, London Merrill Lynch Capital Markets, Hong Kong Booz.Allen & Hamilton, Sydney, Australia Citicorp Investment Bank, Proprietary FX Trading Group, Mumbai, India Financial Engineering LLC, Delray Beach, Florida Williams Energy, Tulsa, Oklahoma His Hi experience in the global financial markets covers the f ll i areas: i i h l b l fi i l k h following Fund of Hedge Funds Alternative Investment Strategies Collateralized Loan and Bond Obligations Debt Capital Markets Proprietary Foreign Exchange Trading Quantitative Financial Modeling and Quantitative Trading Strategies Derivatives Structuring & Marketing (Credit, Foreign Exchange, Energy, Equity, Fixed Income and Commodities) Corporate Finance, M&A, Venture Capital raising, private equity Rajat earned a Masters degree in International Banking and Finance from Columbia University, New York where he was a D Dean’s F ll at the S h l of I ’ Fellow h School f International Aff i f i l Affairs from 1991 to 1992 H also earned an MBA with a major i 1992. He l d ih j in Finance & Information Systems from the Indian Institute of Management, Ahmedabad (1985-87) and a first class honors degree in Economics from St Stephen’s College, Delhi (1982-85). Mr. Bhatia has published papers in the Hedge Fund Journal, the Financial Express and the Economic Times and has been a visiting Professor at the Center for Banking & Finance at the Saudi American Bank in Riyadh and the Dubai Knowledge Village. Village Page 29 Confidential and ©Neural Capital LLC
  • 30. NEURAL CAPITAL Management Team of NEURAL CAPITAL Mark Needles, PhD INFORMATION PACKAGE 31 March 2009 Managing Director - Head of Quantitative Analysis Dr. Mark Needles, is the Head of Quantitative Analysis at Neural Capital. Prior to this he was a Senior Business Analyst and Project Manager with SunGuard in Houston, Texas. Mark has also worked with Williams Energy as a Senior Quantitative Analyst responsible for the development of very complex models for valuation of long dated energy structured deals such as the Load Serving Deal, the Full Requirements Deal, Load Serving Deal with embedded options and the AC-DC model. All these models required extensive Monte Carlo simulation for the US electricity and natural gas markets in the North East region, California and the Mid West USA. Dr. Needles earned a BS and a PhD in Physics from the Massachusetts Institute of Technology. He also earned an MBA from the University of Houston. Page 30 Confidential and ©Neural Capital LLC
  • 31. NEURAL CAPITAL Management Team of NEURAL CAPITAL Mahendra Mehta, PhD INFORMATION PACKAGE Managing Director - H d of Artificial I lli M i Di Head f A ifi i l Intelligence 31 March 2009 Dr. Mahendra Mehta, is the Chairman & Managing Director of Neural Technologies & Software Ltd., Mumbai, India as well as the Head of Artificial Intelligence at Neural Capital. Dr. Mehta is a recognized international expert on derivatives and risk management and has taught more than 1000 courses on market and credit risk management, derivative products, treasury management, artificial intelligence and mathematical finance. His expertise covers risk management, quantitative trading systems Basel II implementation, Kalman Filters and artificial intelligence He developed a systems, implementation intelligence. Bourse Game which uses the Weiner processes to artificially simulate trading in major currencies and allows 20 traders to simultaneously trade with each other on an electronic dealing system. Dr. Mehta worked as a Vice President in Citibank’s Asia Pacific Analytics group from 1988 to 1995. Between 1995 and 2002 he was the Head of the Derivatives Business at the Saudi American Bank’s Treasury in Riyadh While Dr Mehta worked there the Bank s Riyadh. Dr. there, Saudi American Bank was a subsidiary of Citibank. Previously Dr. Mehta was the Chief Design Engineer (Radar Systems) of the Light Combat Aircraft project for Hindustan Aeronautics Limited, Bangalore and the Indian Air Force. He has regularly conducted finance courses in Turkey, Poland, South Africa, Saudi Arabia, India, Hungary and UAE. He has lectured widely on application of Artificial Intelligence techniques in trading. In particular, he has presented papers on hedging and risk management at the London Business School, The Indian Institute of Management and the Swiss Federal Institute of Technology (ETH), Zurich. He has published more than 20 articles on engineering and financial sciences in a variety of journals and co-authored Neural Networks in Capital Markets, 1995. Dr. Mehta earned a PhD from the Indian Institute of Technology, Bombay and a Bachelors of Technology from the Indian Institute of Technology, Kharagpur. His PhD thesis was in the area of Kalman filters and Neural Networks. Page 31 Confidential and ©Neural Capital LLC
  • 32. NEURAL CAPITAL Management Team of NEURAL CAPITAL Ranjan Chakravarty, PhD INFORMATION PACKAGE 31 March 2009 Managing Director - Head of Risk Management Dr. Ranjan Chakravarty, is the Head of Risk Management at Neural Capital. Dr. Chakravarty has served as the Managing Director and Head of Global Capital Markets Valuation and Product Control at the DBS Bank’s worldwide headquarters in Singapore. He also served Hypovereins Bank as a Managing Director and Head of Risk Management for the entire Asia Pacific Region. As a member of the bank’s Executive Committee, he was responsible for the risks of a US$ 18 billion balance sheet. Dr. Chakravarty also worked as a Senior Vice President with GE Capital, Stamford, CT with responsibility for managing a US$ One Billion US high yield bond portfolio and a US$ 700 million US preferred stock portfolio portfolio. Other roles included Vice President of Risk Management with Bank Boston in Boston, Associate, Bankers Trust, New York and Proprietary Trader at Millennium Partners, New York. His product knowledge and experience covers: Fixed Income Relative Value, Proprietary FX Trading, Credit Derivatives, US High Yield Bonds Emerging Market Bonds (Latin America and Asia Pacific) Interest Rate Derivatives Equity Derivatives Hybrid Bonds, Pacific), Derivatives, Derivatives, Derivatives, Convertible Bonds, Asset Swaps, Market Microstructure and Program Trading Strategies. He published a highly quoted research paper in the Journal of Banking and Finance (1995). This paper is a pioneering work on intra-day trading, bringing together management science, econometrics and high frequency data analysis. It identifies and rigorously explains the unseen but powerful factors that drive intra-day patterns in the bid-offer spread. He also published a paper intra day bid offer on Applied Econometrics in Ciencia Ergo Sum (1995). Dr. Chakravarty earned a PhD in Finance from the University of Texas at Arlington. His thesis was in the area of Market Microstructure: Intra-day Pricing and Volatility Patterns. He is member f Omicron Delta Epsilon, International Honor Society Economics H i a m mb r of Omi r n D lt Ep il n Int rn ti n l H n r S i t in E n mi was a P t D t r l F ll Post Doctoral Fellow at t Columbia University, Graduate School of Business. Page 32 Confidential and ©Neural Capital LLC
  • 33. NEURAL CAPITAL Management Team of NEURAL CAPITAL Jaime Cuevas Dermody, PhD INFORMATION PACKAGE Managing Director - H d of Investor Relations M i Di Head f I Rl i 31 March 2009 Dr. Jaime Cuevas Dermody is the Principal and Founder of Financial Engineering LLC in Delray Beach, Florida - a firm that creates and sells intellectual property involving mathematical finance and after-tax optimization of portfolios to hedge funds, Wall Street firms and family offices of high net worth individuals. He is also the Head of Investor Relations at Neural Capital. From 1998 to 2000, he was the Managing Director of Quantitative Research at AVM, the firm that manages the III family of fixed-income funds with around US$ 3 billion under management. He taught and did research on fixed-income valuation in the presence of transaction costs and taxes as well as other mathematical finance research at: taxes, as, The University of Strathclyde, Glasgow (1995-1998) The Stern School, New York University (1994-1995) University of Illinois at Chicago (1988-1994) Arizona State University (1984-1988) (1984 1988) University of California at Berkeley (1983-1984) University of Texas at Austin (1981-1983) From 1975 to 1976 he was the Director of Strategic Planning at Eastern States Bankcard Association in Lake Success, NY. From 1974 to 1975 he was a Financial Analyst at the Ford Motor Company Car Engineering Group in Dearnborn MI Dearnborn, MI. He has numerous publications in the leading professional finance journals, including: The Journal of Finance, The Journal of Financial and Quantitative Analysis, and Mathematical Finance. He has been a consultant to several corporations and law firms. His mono- graph in Financial Markets, Institutions & Instruments (Blackwell Publishers, May 1994) with R. Tyrrell Rockafellar, entitled Mathematics of Debt Instrument Taxation, is the leading publication in that area. Taxation area Dr. Dermody earned an MBA in Operations Management from the Wharton School, University of Pennsylvania in 1973 and a PhD in Economics also from the Wharton School, University of Pennsylvania in 1982. Earlier he had graduated with a BS cum laude in Mathematics from the University of Maryland at College Park in 1970. Page 33 Confidential and ©Neural Capital LLC
  • 34. NEURAL CAPITAL Management Team of NEURAL CAPITAL Dan Graham INFORMATION PACKAGE 31 March 2009 Managing Director - Head of Information Technology Dan Graham is the Chief of Information Technology Security and Director of Client Server Technology at the Stern School of Business, New York University. He has been with New York University since June 1980. He is also Head of , y y J f Information Technology at Neural Capital and the Founder of Quorum Data in New York. Dan’s experience in information technology covers the following areas: Grid computing: infrastructure design, construction and operation, system and network installation and management Networking: Ethernet, routers (wired & wireless), switches, cable plant design and management, KVM with local and remote management. Mathematical modeling application management: CPLEX, Gauss, IMSL, Lindo, Limdep, Matlab, Mathematica, Minitab, SAS, Splus and SPSS. Storage management: SCSI and IDE RAID arrays served on SUN, AMD and Intel platforms for system, administrative database and financial research data. Familiar with Disksuite, Veritas, 3-Ware, Adaptec, Dell and Western Scientific RAID array management. Databases: Ingres, MySQL SUN: Solaris (Sparc and X86) servers and workstation management, kernel configuration, SUN Grid-Engine, NFS disk services, services FLEXLM network license management Security: Aide/Tripwire and TCP wrapper X11 management, wrapper, Utilities: Shell scripting, Aide, Awk, Sed, Emacs, SSH/SSL Microsoft Windows: (98/NT/2000/XP/2000-Server/2003-Server) Programming : GNU: C and Fortran-77 & 90, HTML, Microsoft-C, Perl Legacy: Algol-W, BAL, Basic, Fortran-IV/66/77/90, Pascal, PL/1, RPG, DEC: Basic-Plus-2, Cobol, Fortran-10, Macro, Snobol-IV, Xbasic b b b Dan earned a B.S. Computer Science, S.U.N.Y. at Stony Brook, Stony Brook, NY in June 1976. He excelled in Computer Architecture, Systems Design, Operating Systems Design, Compiler Design, Finite Mathematical Structures and Numerical Methods. He has also served in the United States Army as a specialist. Page 34 Confidential and ©Neural Capital LLC

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