Circle Group Holdings Inc (CXN)

[2bStealthy]

Circle Group thinks big
By Jordan Sokol Daily Herald Staff Writer
Posted 1/18/04

Two things are apparent in today's world: people are getting heavier and terrorism frightens us more.

Greg Halpern, the chief executive of Mundelein-based venture capital firm Circle Group Holdings Inc., is worried that quality of life suffers as a result. And he's built his business around providing funding to bring timely and life-changing technologies to market to address such problems.

While his company still is tiny, with a third-quarter loss of $709,104 on revenue of $134,051, Halpern points out that such losses are typical of an emerging technology firm developing new products.

"We are really working to the future," Halpern said. "Otherwise, we would just be another mainstream business."

Halpern says Circle Group is poised to make a difference in people's lives with products like a fat substitute that it launched last week.

"New technology needs a convergence of interests to solve a global problem," the 45-year-old Halpern said. "Health and public safety are two of those problems that are creating so much pain and suffering that a solution is absolutely necessary."

A lifelong entrepreneur, Halpern brings invaluable experience in computer programming and emerging technologies to Circle Group.

In the 1980s, Halpern developed, patented and successfully marketed a technology as an electronic anesthesia for the dental community.

Over the years, he became focused on bigger, universal problems, precisely 186 of which he has made into a list.

Personal safety joined public safety on the list. Almost three years ago, Halpern invented and began teaching Braveway, a unique brand of self-defense. Community members are taught Braveway at Circle Group's full-sized gym by its staff, several of whom, including Halpern, are judo experts.

Halpern's agenda may seem more in sync with that of a humanitarian or a social activist than a CEO. Rising health care costs and increasingly poor eating habits worry Halpern because they hurt people's ability to enjoy life and live longer.

"Foods have been made to break through people's natural resistance to gorging themselves," he said. "This is a winning product to sell fatty products but a losing formula for the health of the world."

But problems also offer business opportunities.

"There are 14,000 developed technologies that are fully researched and patented at the top 21 universities and government, but 99.9 percent of them do not find a commercialization partner," Halpern said. "That's where we come in. We help build the nuts and bolts of small business infrastructure that may be challenging to the entrepreneur."

Halpern took a crucial step when he made a deal in 2001 with UTEK Corp., an innovative business that assists public companies in acquiring breakthrough technologies from universities and federal research laboratories.

Halpern's strategic alliance with UTEK has helped Circle Group acquire major breakthrough technologies from the U.S. Department of Agriculture and the Department of Energy.

"Greg is unusual in that he has a higher mission with his ventures," said Cliff Gross, CEO of UTEK. "A lot of companies work with UTEK to improve their product line, but Greg is addressing a major health problem here."

Gross was referring to Circle Group's FiberGel Technologies subsidiary and its Z-Trim product, an all-natural fat replacement developed at the USDA that can lower calories by up to 50 percent without affecting taste or texture. In August 2002, Circle Group acquired FiberGel Technologies from UTEK, and now owns the worldwide license for Z-Trim.

Gross sensed that Z-Trim was a wonderful product when he was given a taste test by the scientist and inventor, George Inglett, who was named Outstanding Senior Research Scientist in 2001 by the USDA.

"Z-Trim just makes sense and is really needed by the market place," Gross said.

Circle Group also has acquired Mini-Raman Lidar and ThraxVac from the Department of Energy, technologies that detect and destroy biotoxins such as anthrax.

Circle Group's acquisitions and hopes for Z-Trim helped it close 2003 atop the Bloomberg News' Illinois Index, which measures the performance of companies with a minimum market capital of $30 million.

"It is no secret that our stock went up because we began to tell our story," Halpern said.

No analysts follow the company, which is traded on the over-the-counter market, and the stock is extremely volatile.

After an initial public offering at about 75 cents a share on June 6, 2002, the stock was trading at under 5 cents by last January. It recorded a 6,833 percent gain to close the year at $2.08 to top Bloomberg's list.

"All validation is relevant, but a good entrepreneur is always forging ahead," Halpern said.

The stock jumped more last week after FiberGel began marketing Z-Trim, jumping $1.03 Friday to close at $4.45.

But the real story is Circle Group's unusual approach to venture capital investment.

"I am not a fan of the traditional venture capital model," Halpern said. "It calls for the control over the entrepreneur and guts his or her passion."

Halperns decision to enter the public market in 2002 has also afforded Circle Group access to capital to make acquisitions such as FiberGel.

The ability to use its stock as equity also has helped Circle Group shift from a minority investor in ventures to fully owning the technologies.

Such decisions and business strategies have impressed Chuck Reaves, the founder and president of Twenty-One Associates, an Atlanta-based sales training and consulting company, who met Halpern at a CEO summit.

"Greg is the corporate renaissance man," Reeves said. "Typically a CEO of a tech company is a whiz in technology, sales, or finance. Greg can do them all."

Much like the man who runs the show, the Circle Group headquarters is multifaceted. In-house photo, video, and sound studios enhance the company's ability to respond quickly to demands. Workout facilities, 14-foot ceilings and the open environment breeds creativity, Halpern said.

"This is a unique and pleasurable environment," Halpern said. "There really is not much room for stress to take over."

Halpern said he believes he has what may be the best infrastructure to foster a small business available.

"We can insert a business in here … and give it huge commercialization in a year … to get it to the next level," he said.

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