Jon R. Carnes, President. Mr. Carnes has over 19 years experience investing in a broad range of industries and companies of all sizes. From 1992 to 2000 he managed his own stock trading business, becoming the largest private client of two of the nation’s largest electronic brokerage houses. In 2001 he transitioned from trading to making long-term value investments. In 2004, Jon established Eos’s headquarters in Vancouver, Canada. Mr. Carnes is a Phi Beta Kappa graduate of the University of South Carolina with a degree in business economics.

Copyright 2004-2012 Eos Global Holdings, 1400-1500 West Georgia Street Vancouver, BC V6G 2Z6

Emisphere Technologies

Eos made its first investment in Emisphere Technologies (OTCBB: EMIS) in the fall of 2008. The market was in turmoil following the bursting of the credit bubble and Emiphere’s stock had come under extreme selling pressure as its second largest shareholder liquidated its holdings. We had completed months of due diligence networking with some of the sharpest minds in biotech in order to evaluate the prospects for Emisphere’s drug delivery technology. We concluded that the company had huge potential, especially their Phase III Oral Calcitonin program that was partnered with Novartis.

Eos bought big blocks of Emisphere stock from the liquidating fund in the open market at a time when not many investors had the funds or the risk tolerance to buy. At the time, the prospects for Emisphere looked weak because the company was running low on cash and needed to raise money. Our buying and due diligence attracted other institutions and the stock rallied 150% off the lows and the company raised money on much better terms than were available before we invested.

From 2008 to 2011 Eos continued to add to its Emisphere holdings through open market purchases and private placements. Other institutional investors continued to follow our lead. We highlight our investment in Emisphere because it points out that we are long term investors that are actively involved in helping our portfolio companies deal with setbacks and obtaining financing from institutions. Eos treats every investment as a partnership for success.

Southwest China Cement

After receiving approval to expand its capacity by building two additional cement production lines, Sichuan Zhiquan Cement Group approached us seeking financing. Zhiquan needed $40M first round financing to complete two modern rotary clinker production lines. Bank financing was out of the question since Zhiquan was not big enough to get favorable loans. Chairman Chen Zhiquan commented, "Eos offered us the investment capital we needed on reasonable terms. Eos not only invested but also managed the entire process. As my company's needs grew, Eos secured the investment and support of Merrill Lynch, one of the largest investment banks in the world."

The $40M investment in Zhiquan closed on September 26, 2008. What was remarkable about the investment was the fact that it was made at the original agreed on valuation decided in January, prior to the Chinese stock market's more than 50% fall. Eos honored its agreed valuation and saw no reason to demand a lower valuation just because the Chinese market had collapsed. Eos invests strictly based on value and growth potential. While Zhiquan's relative value had fallen, its growth potential had become more certain and was then worth even more.

Furthermore, when the Wenchuan earthquake destroyed one of Zhiquan's plants late in the investment process, Eos's president, Jon Carnes, immediately visited the site of the destruction and pledged to do everything possible to complete the investment on the original agreed terms. Despite the loss of earnings, Eos saw the long term potential to rebuild the region and advised investors to fund the investment at the original agreed valuation and also donated money to support the employees who had lost their homes.

As expected, Zhiquan's first round of financing was a lengthy and difficult process. The company had to be restructured into an entity suitable for foreign investment. Chairman Chen came to realize that "despite the extremely complicated process, Eos always maintained great confidence of the ultimate success and now that the process is complete our second round of financing will be much easier and I am positioned to have access to all the capital I need to become the dominant cement manufacturer in the region".

Background

"Eos" is the Greek name of the goddess of the dawn, responsible for providing the morning dew that nourishes the growing plants. Since 2004, Eos has focused on identifying and funding first and second round investments in small and mid sized companies in the U.S., Canada and China. Having completed over 25 investments to date. Eos manages its investments from its headquarters in Vancouver, Canada. Eos currently focuses on identifying and investing in early stage U.S. and Canadian biotechnology and natural resource companies.

 

Commitment

As a long-term investor, our investment is only the first stage of our relationship with portfolio companies. We design long-term growth and financing plans for each company. Each company that passes our due diligence process is assured successful, timely and efficient funding.

Eos focuses on finding early stage companies with superior management performance, capable of achieving substantial market share and high return on invested capital. These three elements make up what Warren Buffett calls a “franchise” or business that is protected from competition due to barriers to new entrants. A franchise is therefore said to have durable competitive advantages.

The best franchises benefit from one or more competitive advantages. First and foremost are demand-oriented advantages such as customer preference, habit, captivity, switching costs, or lack of substitutes. Second are supply advantages such as cost advantages, geography, technology, patents, or experience. Third are economies of scale whereby the largest company due to high fixed overhead and leading market share enjoys substantially lower per unit production costs than its smaller competitors. Companies that lack significant barriers to entry and must therefore compete on a level playing field are still good investments when management is focused on maximizing operational efficiency. Companies fitting any of these criteria should be able to earn high returns for investors.

Public or Private Equity

Eos makes private investments in companies where management agrees to execute a plan leading to higher liquidity and valuation. The liquidity plan should involve an IPO on a suitable exchange (anywhere in the world) or a merger or acquisition.

Eos actively invests in private placements or PIPE’s in existing publicly traded companies. Eos also purchases founder’s shares and other share blocks from existing investors.

Warren Buffett

Warren Edward Buffett (born August 30, 1930, in Omaha, Nebraska) is an American investor, businessman and philanthropist. He is regarded as one of the world's greatest investors and is the largest shareholder and CEO of Berkshire Hathaway. With an estimated net worth of around US$62 billion, he was ranked by Forbes as the richest person in the world as of February 11, 2008.

Often called the "Oracle of Omaha," Buffett is noted for his adherence to the value investing philosophy and for his personal frugality despite his immense wealth. Buffett was featured in the critically acclaimed documentary, "IOUSA", produced with the help of our president, Jon Carnes, who got to meet Warren in Omaha at the movie premiere. Jon thanked Warren for his involvement in the project and Warren offered his congratulations on the success.