nelson obus, wynnefield capital hedge fund

Wynnefield PartnersSmall Cap Value, L.P. I (WPSCV LP I)

Wynnefield Capital, Inc.

450 7th Avenue, Suite 509

New York, NY 10123

+1 (212) 760-0814

www.wynnefieldcapital.com

December 2015

Legal Notice

Private & Confidential

Wynnefield Capital, Inc. (“WCI”) is the investment manager to the Wynnefield Partners Small Cap Value L.P. I, Wynnefield Partners Small Cap Value L.P., and Wynnefield Small Cap Value Offshore Fund, Ltd (collectively known as the “the Funds”). This presentation has been prepared solely for informational purposes for the Wynnefield Partners Small Cap Value L.P. I fund (“the Fund”) and this presentation is not an offer to buy or sell or a solicitation of an offer to buy to sell any limited partnership interests in the Fund or to participate in any trading strategy. If any offer of limited partnership interests or shares is made, it shall be pursuant to a definitive Private Placement Memorandum prepared by or on behalf of the Fund which would contain material information not contained herein and which shall supersede this information in its entirety. Any decision to invest in limited partnership interests or shares described herein should be made after reviewing the definitive Private Placement Memorandum for the Fund, conducting such investigations as the investor deems necessary and consulting the investor’s own investment, legal, accounting, and tax advisors in order to make an independent determination of the suitability and consequences of an investment in the Fund.

This presentation and its contents are proprietary information of the Investment Manager of the Wynnefield Partners Small Cap Value L.P. I fund, and any reproduction of this information, in whole or in part, without the prior written consent of the Investment Manager is prohibited. Additional information including performance information for Wynnefield as investment manager of other funds is available from the Investment Manager upon request.

Hedge fund investing is speculative and may involve substantial investment, liquidity and other risks. Hedge funds can be leveraged and their performance results can be volatile. Performance returns are net of expenses and a management fee that ranges from 1% to 1.5% (depending on share class) and include reinvestment of any dividends and interest. Past performance is not indicative of future returns. Many factors affect performance including changes in market conditions and interest rates and responses to other economic, political or financial developments. Performance numbers have been calculated using the NAV’s provided by SS&C, Inc, the administrator of the Fund. Audited numbers are prepared annually by CohnReznick LLP, the independent auditors of the Fund. 2015 returns are unaudited.

Individual investor returns compared to the Fund’s overall return may vary due to date of initial investment, high water mark, and status of investor under new issue rules. Please refer to your monthly statement for your actual results.

Under no circumstances do the contents of this presentation represent a recommendation to buy or sell a security. The Investment Manager buys and sells securities on behalf of the Fund’s investors and may do so, before and after any particular security is mentioned herein, with respect to the securities discussed in this presentation. The Investment Manager’s appraisal of a company’s prospects is only one factor that affects the Investment Manager’s decision to buy or sell shares in that company. Other factors might include, but are not limited to, the presence of limits on individual positions, decisions regarding portfolio exposures, and general market conditions and liquidity needs. There may not always be consistency between the views expressed in this presentation and the Investment Manager’s trading on behalf of the Fund’s investors.

Table of Contents


About Wynnefield Capital 3

Team Structure 4

Net Performance 5

Tax Efficient Investing 6

Investment Philosophy 7

Portfolio Characteristics 8

Constructive Activism 9

Outperformance of Small Cap Value 10

Investment Process 11

Long and Short Positions 12

Exit Strategy & Risk Management 13

Service Providers / Terms 14

Team Biographies 15

Contact Information 19

About Wynnefield Capital

Wynnefield employs an equity small-cap value special situations strategy that practices constructive activism.

The investment team seeks out under-followed, misunderstood, and undervalued companies which lead to the largest pricing inefficiencies and opportunities in the public market space.

Wynnefield was founded in 1992 by Nelson Obus and Joshua Landes, both formerly of Lazard Frères and Co. Mr. Obus has over 50+ years experience investing in small cap companies.

The fund has an annualized net return of approximately 13.5% since inception in 1992.

The principals and employees are the largest investors, comprising about 20% of the Fund’s AUM.

The investment team has been in place since 1999 with two new additions and little employee turnover.

The investment manager holds core positions about 6-8 years, turning the portfolio approximately 25% per year, providing its limited partners the benefit of tax efficient returns.

Team Structure

Nelson ObusCo-founder, President and CIO

Mr. Obus has been the President and CIO of Wynnefield Capital, Inc. since its inception in November 1992. From February 1990 until September 1992 he was Research Director of Schafer Capital Management, Inc. and Schafer Cullen Management, Inc. Prior thereto, Mr. Obus worked at Lazard Frères & Co. for eight years as an analyst, account executive and Director of Sell Side Research in the equity sales department. He received a B.A. from New York University and a M.A. and A.B.D. from Brandeis University in Politics. Mr. Obus serves on the Board of Directors, the Audit Committee, and the Compensation Committee of Layne Christensen Co. (NASDAQ: LAYN), the Board of Directors of Underground Solutions, Inc. (OTCBB: UGSI), and he served on the Board of Directors, the Audit Committee, the Strategic Committee and the Nominating and Governance Committee of Breeze-Eastern Corporation (NYSE: BZC). He also serves on the Board of Advisors of the Appalachian Mountain Club, the Board of Directors of the Stonybrook - Millstone Watershed Association, the Board of Advisors of the Bank of Princeton, as well as the Board of Directors of the Princeton Historical Society.

Investment Team Operations Team

Joshua LandesCo-founder and COO

Nelson ObusCo-founder, President and

CIO

Max BatzerPM and

Head of Activism

Dwight MamanteoPM

Stephen ZelkowiczAnalyst and Trader

Robert StrausPM/Analyst

Elise RaphelDirector of Marketing

Rick WassermanCCO

Joshua LandesCo-founder and COO

Alex LiuDirector of Operations

and Trader

Net Performance


* Pre-tax

Wynnefield Partners Small Cap Value, L.P. I (WPSCV LP I) has a Annualized Rate of Return of 13.5%, net of fees.

$1,000,000 invested in Wynnefield Partners Small Cap Value, L.P. I in 1993 would have resulted in an absolute total value of approximately $18,578,545* or an 18.6 times return, net of fees.

Growth of a $1,000,000 investment since inception(January 1, 1993 to December 31, 2015)

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

$18,000,000

$20,000,000 WPSCV LP IS&P 500Russell 2000HFRI -FWCI

Tax Efficient Investing‡


‡This presentation includes references on tax efficiencies. Wynnefield does not render legal or tax advice, and the information contained in this communication should not be regarded as such. You should consult with your own legal and tax adviser.

*For purposes of the above illustration, at the federal level, 39.6% was used for the short-term capital gains tax rate and 20% was used for the long-term capital gains tax rate, although these rates have historical variation.

Minimize partner’s taxes through a focus on long-term capital gains.

Focus on long-term investing and not short-term trading.

Attempt to structure exits to avoid short-term capital gains.

Generate portfolio turnover of approximately 25% per year.

VS.

After over 23+ years with WPSCV LP I, a $1MM investment would be worth:

After federal short-term capital gains tax rates.*

After federal long-term capital gains tax rates.

Approx.$15,870,287 (net of fees)

Approx.$12,259,276(net of fees)

Investment Philosophy


General Overview

Within the universe of US domiciled small capitalization value stocks, focus on companies with market capitalizations typically ranging from $50mm to $500mm.

Uncover investment opportunities ahead of the investment community by focusing on the least researched and most inefficient segment of the market where there is little or no sell-side analyst coverage.

This enables WCI to take advantage of deep value entry points with significant appreciation potential.

As the investment thesis gains traction in the wider investment community, sell-side coverage often follows which can lead to multiple expansion and additional liquidity.

Willing to actively work with management and the Board of Directors, if necessary, to unlock shareholder value.

Sector agnostic ... Follow value.

Top down bottom up in-depth fundamental research. We start with the industry and then go to macro themes with a detailed focus on the company and its leadership.

Investment Opportunities

Companies that trade at low multiples of cash flow andhard assets.› Deeply discounted valuations can be caused by an

overreaction to what we perceive to be “one-time” negative announcements.

Companies that have low levels of debt and high or growing levels of free cash flow generation.

Companies that possess a company-specific or industry-group catalyst - because just being “cheap” is not enough.

Companies situated for improved earnings and multiple expansion due to regulatory changes.

Companies that possess clearly identifiable and sustainable competitive advantages.

Insider investing patterns that show a change from selling or limited buying to that of increased buying in frequency or scale.

Change in family or generational ownership.

Change in corporate governance or management.

Industry consolidation, spinoffs, turnarounds, restructuring…

Portfolio Characteristics

InvestmentInstruments

Common stocks› Private companies are limited

to no more than 10% of the Partnership’s assets at cost.

› Buy U.S. companies. May invest in global companies that have a majority of sales and operations in U.S.

Small Cap andMicro CapPortfolio

Highly concentrated portfolio-Top 10 positions typically 70% of NAV.

Median market cap about $120MM. Approximately 40 positions.

HistoricalExposure Ranges

Typical net long exposure between 60-120%, ideally around 90%.

Will use leverage when deemed appropriate by CIO.

Activism

Schedule 13D Filings (over 5% ownership): 11.

Schedule 13G Filings (passive): 4. Practice constructive activism.

Constructive Activism

Wynnefield Case Study: Core-Mark Holding Company, Inc. (CORE)

2011 At Wynnefield’s suggestion, Mr. Gross joined the

Board of CORE in 2011.

CORE initiated a share repurchase program in 2011.

When Mr. Gross joined the Board in 2011, the stock was $15. By the end of 2012 the stock was trading in the $50’s

He is currently Chairman of the Compensation Committee.

2005 CORE emerged from Fleming Companies

bankruptcy and went public.

2007 Wynnefield buys the stock.

2007-2011 The Board of Directors was not shareholder friendly. There were

no corporate governance policies or an equitable compensation structure in place. As a result, the stock did not perform as it was expected to. Wynnefield suggested that Robert Gross be appointed to the Board of CORE. Mr. Gross had extensive consumer product and retail experience and had been CEO of Monro Muffler, a previously profitable investment for Wynnefield.

At that time Wynnefield, a large holder, owned more than 6% of CORE’s outstanding shares.

2012 CORE began returning cash to shareholders by issuing dividends

in 2012. (Still does).

Wynnefield started selling its position in 2012 in the mid to high $50’s, making its last sale in the $70’s at the end of 2013.

Outperformance of Small Cap Value

Research shows that over a long investment horizon, small cap stocks outperform other asset classes. At the same time, value stocks outperform growth. In one study, Ibbotson Associates studied the annual performance of stocks classified by size (large, mid, small and micro) as well as by style (growth and value).

They found that the small cap value and micro cap value stocks far outperform all other asset classes over time.

*Source: Morningstar Ibbotson SBBI Chart

IbbotsonⓇ SBBIⓇ

Stocks, Bonds, Bills, and Inflation 1926-2013

Investment Process


Idea Generation

Leverage management network. Leverage peer network. Quantitative Screening. Macro outlook. Industry expertise.

Attend industry conferences. Read industry journals.

Company Selection

Deep financial analysis and modeling. Focus on free-cash-flow. Competitive market analysis. Channel & background checks. Management and plant visits. Risk/reward profile with expected probability.

Portfolio Management Scale-in and scale-out positioning. Assess individual idea exposure. Sizing based on conviction level. Average portfolio turnover approx. 25% per year.

Exit Strategy and Risk Management

Realization of expected catalysts. Changing multiples. Strategic buyers or evolving shareholder base. Enhanced analyst coverage. Activism.

Monitor industry threats & management execution. Monitor company strategy & governance compliance. Position limits. Use hedging to limit downside risk. When we encounter a superstar manager we will hold

position even if it takes on growth characteristics.


Long Positions

Utilizing thorough balance sheet analysis to measureand identify companies with:› Positive short and long-term solvency profile.› Undervalued assets.› Positive or improving free cash flow generation.

Positive assessment of the quality of management that understands value creating capital allocation such as:› Using free cash flow to deleverage the balance sheet.› Buy back stock.› Pay dividends or expand business in a disciplined,

immediately accretive fashion.

Company in an industry favorably disposed to M&A trends, changing regulatory environment/ government policy, and top-down economic trends.

Increasing insider buying.

Company has a sustainable competitive advantage and high barriers to entry.

Short positions are primarily used as a hedging tool due to the difficulty of shorting less liquid micro-cap equities.

We will short specific names when our research turns up a “catalyst” short.

Index Futures & ETF’s are the main instruments used to employ these hedges.› Deteriorating Business/Industry fundamentals.› Leveraged balance sheet and poor earnings quality.› Manipulation of working capital to mask future cash

flow deterioration.› Increasing insider selling.› Management and Board of Directors Turnover.

Short Positions

Long and Short Positions

Exit Strategy


Typical exit and value creation strategies

We continually monitor the value of our portfolio companies relative to their earnings power and cash flow generation.

Use ETFs and Futures & Options on indexes as the primary hedging tool.

Strategic Buyers

Who can increase the operating business’ value by eliminating the company’s corporate overhead and public listing expenses, and explore revenue synergies and product line expansion.

Who can improve their own earnings by taking advantage of the disconnect between ourportfolio company’s current public valuation and its true private market value.

Evolving Shareholder Base Who have taken notice as multiple expansion occurs when the investment catalyst takes hold.

Financial Buyers Who are attracted to the unleveraged or deleveraging balance sheets and high levels of

free-cash-flow that are typical of a WCI portfolio company.

Activist Participation In cases where management teams are not unlocking value, WCI takes an activist

role to improve company operations, direct the company to allocate its capital towards higher return investments, and release value for all investors.

Risk Management

Service Providers/Terms


Prime Broker

Jefferies LLC 520 Madison Avenue, 12th FloorNew York, NY 10022

Fund Administrator

SS&C, Inc. 80 Lamberton RoadWindsor, Connecticut 06095

Independent Auditors

CohnReznick, LLP 1301 Avenue of the AmericasNew York, NY 10019

Legal Advisors

Hutner Klarish LLP 1359 BroadwayNew York, NY 10018

Fund

Wynnefield Partners Small Cap Value LP I(a US limited partnership, 3c-7 fund).

Fund Terms

Management Fee: 1.5%

Performance Fee: 20%

Minimum Subscription: $250,000

Redemptions: Semi-Annual

Lock Up: 2 year

Team Biographies


Investment Team

Nelson Obus, Co-founderPresident and CIO

Max BatzerPM and Head of Activism

Mr. Obus has co-managed Wynnefield Capital with Mr. Landes since its inception in November 1992. His principal responsibilities are as Chief Investment Officer. From February 1990 until September 1992 he was Research Director of Schafer Capital Management, Inc. and Schafer Cullen Management, Inc. Prior thereto, Mr. Obus worked at Lazard Frères & Co., for eight years as an analyst, account executive and Director of Sell Side Research in the equity sales department. He received a B.A. from New York University and a M.A. and A.B.D. from Brandeis University in Politics. Before coming to Wall Street, Mr. Obus worked as an educator and land manager in the environmental field. Mr. Obus serves on the Board of Directors, the Audit Committee, and the Compensation Committee of Layne Christensen Co. (NASDAQ: LAYN), the Board of Directors of Underground Solutions, Inc. (OTCBB: UGSI), and he served on the Board of Directors, the Audit Committee, and the Nominating and Governance Committee of Breeze-Eastern Corporation (NYSE: BZC). He also serves on the Board of Advisors of the Appalachian Mountain Club, the Board of Directors of the Stonybrook - Millstone Watershed Association, the Board of Advisors, Bank of Princeton, as well as the Board of Directors of the Princeton Historical Society.

Mr. Batzer joined Wynnefield Capital in 1999. He currently serves as Portfolio Manager and Head of Activism. From 1991 to January 1999, he was Chairman of the Board and CEO of Diagnostic Health Services. From 1981 until 1988, he was director and executive committee member of Simmons Airlines Inc., a publicly traded regional airline. From 1981 through 1991, Mr. Batzer was also President of General Hide and Skin Corporation, a worldwide commodity trading organization. Mr. Batzer received his B.S.E. from the Wharton School at the University of Pennsylvania and his M.B.A. from the University of Arizona. Mr. Batzer serves on the Board of Directors of API Group Plc. (NYSE: API), Summer Infant (NASDAQ SUMR), and Trans World Corporation (NASDAQ: TWOC). He served on the Board of Cornell Corrections (NYSE: CRN) as Chair of the Nominating and Governance Committee and as Chairman of the Transaction Committee during a successful sale process.

Team Biographies


Investment Team

Dwight Mamanteo, PM

Stephen Zelkowicz, Analyst and Trader

Robert Straus,PM/Analyst

Mr. Mamanteo joined Wynnefield Capital in 2004. He currently serves as Portfolio Manager. Prior to joining the firm, Mr. Mamanteo worked in the technology field for over 10 years. Mr. Mamanteo received an M.B.A. from the Columbia University Graduate School of Business (including completing Columbia University’s Value Investing Program) and a B.Eng. from Concordia University, Montreal, Canada. Mr. Mamanteo serves on the Board of Directors of MAM Software Group (NASDAQ: MAMS), and GlyEco, Inc. (OTCBB: GLYE).

Mr. Zelkowicz joined Wynnefield Capital in 1999. He currently serves as Research Analyst and Trader, where he is responsible for all trading operations as well as providing maintenance research on current positions within the portfolio. Prior to joining Wynnefield, he worked in sports marketing for the Philadelphia Flyers of the National Hockey League. Mr. Zelkowicz received a B.A. from the University of Pennsylvania, majoring in History and International Relations. He serves on the Board of Directors of Summer Infant (NASDAQ: SUMR).

Mr. Straus joined Wynnefield Capital in 2015. He currently serves as a PM/Equity Analyst with a research focus on small-cap private and public investment opportunities. Prior to joining the firm, he worked at Gilford Securities; his fundamental equity research experience spans over 15 years. Mr. Straus received an M.B.A. in Finance from Bentley University and a BSBA from the University of Hartford.

Team Biographies


Operations/Marketing

Joshua Landes, Co-founder and COO

Elise Goldberg Raphel, Director of Marketing

Mr. Landes has co-managed with Mr. Obus, Wynnefield Partners Small Cap Value L.P. since its inception in November 1992, Wynnefield Partners Small Cap Value L.P. I, since its inception in July 1997 and the Wynnefield Small Cap Value Offshore Fund, Limited since its inception in January 1997. His principal responsibilities are administration and marketing related. Prior thereto, he was employed at Lazard Freres & Co. from 1984 to 1991. During this period, he served as a trading assistant, analyst and institutional equity salesman in the capital markets group and was an associate at Lazard Realty. Mr. Landes received a B.A. in Economics from Rutgers University. He is a member of the Board of Directors of S.A.R. Academy in Riverdale, NY. He enjoys an interest in architecture which included helping to finance the 2003 Academy Award nominated documentary “My Architect.”

Ms. Raphel joined Wynnefield Capital in 2012 as Director of Marketing. She is responsible for forging relationships with prospective investors and, together with Joshua Landes, managing relationships with current investors. Prior to joining Wynnefield Elise spent six years on the hedge fund sales team at Gerson Lehrman Group. Ms. Raphel received an M.B.A. and a Master of Public Health from the Columbia University Graduate School of Business and the Mailman School of Public Health respectively. She earned her B.A. in Government and Communications from the University of Virginia.

Team Biographies


Operations/Marketing

Frederick Wasserman, CCO

Alex Liu, Director of Operations and Trader

Mr. Wasserman began working with Wynnefield Capital as a consultant in January 2007 and became its Chief Compliance Officer in March 2012. Mr. Wasserman is President of FGW Partners LLC, which provides financial and management consulting services. From 1989 to 2007, he served with increasing responsibility as a C-level officer in the Gift and Collectibles and Sportswear industries. He received his B.S. in Economics with an Accounting major from the Wharton School of the University of Pennsylvania and was previously a CPA. Mr. Wasserman currently serves on the Board of Directors of five of Wynnefield's current or former portfolio companies: Breeze-Eastern Corporation (NYSE: BZC), DLH Holdings Corp--Chairman (NASDAQ : DLHC), National Holdings Corporation (OTCBB:NHLD), MAM Software Group (NASDAQ: MAMS), and SMTC Corporation (NASDAQ: SMTX).

Ms. Liu joined Wynnefield Capital in 2003. She serves as Director of Operations and Trader. Ms. Liu actively participates in the firm’s trading operations. Additionally, she is responsible for overseeing all aspects of portfolio administration including portfolio accounting and operations, performance measurement, information reporting and trade support. She received a B.A. in International Politics and History from New York University.

Contact Information


We communicate with our investors via monthly statements from the administrators, factsheets and quarterly and annual letters that detail the performance of the funds, investing rationale, net exposure, and our general opinions about the current market. All letters since inception are available upon request.

Wynnefield Capital, Inc.450 7th Avenue, Suite 509New York, NY 10123

Joshua LandesCo-founder and COO(212) 760-0814 [email protected]

Elise RaphelDirector of [email protected]