Financial Performance & Scoring -- © 2006 Gaskins IPO Desktop/IPOdesktop

Pre-IPO analysis, grading & scoring -- updated Nov 3

. Business Model Rating Criteria

A = high growth market, potential leader; B = more competitive market; C= 'public venture capital'

. Calculations

. IPO Price to annualized Sales Ratio -- (Price / Sales)

Numerator

Denominator

IPO market capitalization…

Annualized Sales (last six month's revenues times 2)

(post-IPO # of shares times mid-point of IPO price range)

. IPO Price to annualized Earnings (loss) -- (Price / Earnings)

Numerator

Denominator

IPO market cap

Annualized Earnings (loss) from the last quarter

=========================================================================

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or ticker for analysis

scheduled below

=========================================================================

Summary ratios for the week of Nov 6 (IPOs not previously analyzed, scored & graded)

(P/E ratios based on annualizing recent results, see notes)

VALUATION RATIOS

IPO Mrkt

Price /

Price /

Price /

Price /

% offered

Cap (mm)

Sales

Earnings

BookValue

TangibleBV

in IPO

ACA Capital (ACA)

$589

1.4

11

1.2

1.2

29%

financial guaranty ins & asset mgt: C+, 7

Post-IPO shrs:14.9mm

ActivBiotics (ACTV)

$194

n/a

-10

3.2

3.1

27%

biotech-inflammatory/bacterial: C, 5

Post-IPO shrs:14.9mm

Canadian Solar (CSIQ)

$382

9.7

53

3.8

3.8

28%

solar module products: C+, 7

Post-IPO shrs:27.3mm

Capella Education CPLA

$285

1.7

28

3.7

3.7

26%

online post-secondary education: C+, 7

Post-IPO shrs:15.4mm

KBW Inc. (KBW)

$608

1.6

16

1.7

1.8

21%

invesment bank -- financial services: B-, 7

Post-IPO shrs:30.4mm

Metabolix (MBLX)

$239

31.5

-28

2.7

2.8

32%

biotech,environmentally safe alternatives: C, 7

Post-IPO shrs:18.4mm

OneBeacon Insrnce (OB)

$2,500

1.2

9

1.5

2.0

20%

property/casualty insurer: C+, 7

Post-IPO shrs:100mm

PhysiciansFormulaPHYS

$219

2.1

27

3.9

-12.8

46%

cosmetics-high end mass market: C+, 7

Post-IPO shrs13.7mm

Thermage (THRM)

$269

5.0

-35

3.6

3.6

27%

devices for wrinkles: C, 7

Post-IPO shrs:22.4mm

=========================================================================

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scheduled below

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ACA Capital Holdings

ACA, C+, 7

financial guaranty ins & asset mgt

Post-IPO shrs:14.9mm

New York, NY

2003

2004

2005

June 05*

June 06*

IPO Mkt

Rev ($mm)

$112

$193

$331

$145

$215

Cap (mm)

Premiums earned

$19

$30

$33

$16

$13

$589

Investment income

$53

$126

$255

$114

$160

@$16

Interest Exp ($mm)

$39

$101

$214

$95

$137

Interest % of rev

35%

52%

65%

66%

64%

Profit (loss) ($mm)

$20

-$4

$29

$13

$26

Profit (loss) %

18%

-2%

9%

9%

12%

*for the six months ended June 30

Six months ended June 30, 2006 compared with six months ended June, 2005

Net premiums down, investment income up

. The growth in total revenues was primarily due to increases in investment income as a result of

the impact of rising short-term interest rates

. Aan increase in insured credit swap premiums received in ACA’s Structured Credit line of

business attributable to its growing volume of business in this area and fee income in the CDO

Asset Management line of business as a result of increased assets under management and the

increase in deals closed in 2006 to date compared to the same period in 2005.

VALUATION RATIOS

IPO Mrkt

Price /

Price /

Price /

Price /

% offered

Cap (mm)

Sales

Earnings

BookValue

TangibleBV

in IPO

ACA Capital (ACA)

$589

1.4

11

1.2

1.2

29%

SCORECARD

Mgt

Market

Market Do-

Proprie-

Total

1-5, 5 is high

Growth

mination

tary

rating

20 is perfect

2

2

2

1

7

Business

. Provides financial guaranty insurance products to participants in the global credit derivatives

markets, structured finance capital markets and municipal finance capital markets.

. Also provides asset management services to specific segments of the structured finance capital

markets.

Three principal operating business lines:

. Structured Credit

. Municipal Finance, which are both financial guaranty insurance lines of business, and

. CDO Asset Management business.

. Conducts the financial guaranty insurance businesses through ACA Financial Guaranty

Corporation, ACA "A" rated, regulated insurance subsidiary.

. Conducts the asset management business through ACA Management, L.L.C., a subsidiary of

ACA Financial Guaranty.

. As of June 30, 2006, had insured credit exposure of $31.4 billion and assets under management

for third parties were $12.1 billion

Risk

FASB Financial Guaranty Insurance Review.

. In January and February 2005, the SEC staff discussed with several financial guaranty industry

participants the differences in loss reserve recognition practices in the industry.

. In June 2005, at the request of the SEC, the FASB added a project to their agenda to review and

codify accounting standards for financial guaranty insurance contracts as they relate to loss

reserving policies and later added a review of accounting policies in the financial guaranty

insurance industry as they relate to premium recognition and deferred policy acquisition costs

. Proposed guidance is expected to be issued by the FASB later in 2006 and final guidance is

expected to be issued in 2007. When the FASB reaches a conclusion, ACA and the financial

guaranty insurance industry may have to change certain aspects of ACA’s, and the industry's,

relevant accounting policies.

. The impact…could be material. Until the issue is resolved, ACA will continue to apply its

existing accounting policies as disclosed in the audited financial statements as of December 31,

2005 and 2004 and for the years ended December 31, 2005, 2004 and 2003.

. ACA believes that any new guidance would principally impact its Municipal Finance business.

2004 Recapitalization

. In 2004, ACA recapitalized its balance sheet and reinforced its credit profile with a $169.7

million equity capital investment, including $105.0 million from Bear Stearns Merchant Banking

and $64.7 million of incremental capital from pre-existing stockholders, management and an

additional institutional stockholder.

. This capital raise was necessitated by the revised minimum capital requirements established by

S&P, which increased requirements had precipitated the placement of ACA Financial Guaranty's

financial strength rating on CreditWatch negative by S&P.

. Following the capital raise, ACA Financial Guaranty was removed from CreditWatch negative

and allowed to retain its "A" financial strength rating by S&P, to expand ACA current businesses

and to increase ACA’s product offerings

Employees

As of June 30, 2006, had 102 full-time employees.

Competition

Structured Credit Business (credit protection in the form of credit swaps)

Compete with hedge funds, insurance companies including financial guarantors that, like ACA

Financial Guaranty, insure the obligations of subsidiaries providing credit protection through

swaps, banks, derivative products companies such as Athilon Capital Corp. and non-bank financial

institutions.

Municipal Finance Business

As the sole "A" rated financial guarantor, ACA’s target market in the municipal finance line of

business is different than that of other financial guarantors.

. Does not compete directly with "AAA" rated financial guarantors. Radian Group Inc., as the only

AA rated financial guarantor, is able to participate in ACA’s target market, although to a lesser

degree than ACA.

. Strongest competition in the target market is from letter of credit banks and high-yield municipal

mutual funds that purchase uninsured non-investment grade municipal obligations.

. Also competes with structural alternatives to third-party credit enhancement, including senior

subordinated structures

CDO Asset Management Business.

. The financial services industry, and in particular, the market for CDO Asset Management

services, is highly competitive with low barriers to entry.

. Competitors include The TCW Group, Inc., Vanderbilt Capital Advisors, LLC, Blackrock

Financial Management, Inc., Clinton Group Inc. and GSC Partners, among many financial

institutions

Use of $122mm in IPO proceeds from sale of 6.9mm shares

(shareholders intend to sell 3.9mm shares)

General corporate purposes

==========================================================

ActivBiotics

ACTV, C, 5

biotech-inflammatory/bacterial

Post-IPO shrs:14.9mm

Lexington, MA

2003

2004

2005

June 05*

June 06*

IPO Mkt

Profit (loss) ($mm)

-$17.0

-$15.2

-$23.4

-$9.1

-$9.6

Cap (mm)

*for the six months ended June 30

$194

@$13

VALUATION RATIOS

IPO Mrkt

Price /

Price /

Price /

Price /

% offered

Cap (mm)

Sales

Earnings

BookValue

TangibleBV

in IPO

ActivBiotics (ACTV)

$194

n/a

-10

3.2

3.1

27%

SCORECARD

Mgt

Market

Market Do-

Proprie-

Total

1-5, 5 is high

Growth

mination

tary

rating

20 is perfect

2

2

1

5

Business

. Biopharmaceutical focused on treatment of inflammatory diseases and bacterial infections.

Product candidates

Rifalazil

. Lead product candidate, Rifalazil, is a proprietary, orally administered antibacterial agent, which

is in a Phase III clinical trial for the treatment of intermittent claudication associated with

peripheral arterial disease, or PAD.

. PAD is a result of atherosclerosis of the arteries of the lower extremities. Intermittent

claudication is pain, cramping or fatigue in the lower extremities brought on by exertion or

walking and is the most common symptom of PAD.

M40403

. Second product candidate, M40403, is a proprietary small molecule that is designed to mimic the

function of a naturally occurring enzyme, which plays a role in several inflammatory disease

states.

. ACTV plans to initiate a Phase II clinical trial of M40403 for the management of post-operative

ileus, or POI, which is the temporary impairment of bowel function following surgery.

Accounting problems

. ACTV's accounting fim reported material weaknesses due to inadequate finance department

resources, and specifically a lack of sufficiently trained financial staff, which led to an overall

inadequate design in and operating effectiveness of ACTV's internal controls over financial

reporting, as these controls did not provide reasonable assurance that transactions were recorded as

necessary to permit preparation of our financial statements in accordance with generally accepted

accounting principles.

. Recently, ACTV reorganized the finance department and retained an independent senior financial

consultant, who works with ACTV 16 hours a week, or more if we request, for the next three

months or longer by mutual agreement.

. ACTV estimates the aggregate cost of employing these individuals to be $500,000 annually.

Employees

21 employees as of September 30, 2006.

Competition

ACTV expects that competitive products for its product candidates, if successfully developed,

may include the following:

o Rifalazil for Intermittent Claudication Associated with PAD. Cilostazol and pentoxifylline are

approved for use in treating intermittent claudication but have the limitations

. ACTV believes that Kos Pharmaceuticals and Takeda Pharmaceuticals, which currently co

market Advicor for the treatment of high cholesterol, may be seeking to expand the label for this

therapy to include intermittent claudication.

. In addition, ACTV is are aware of several therapeutics for PAD that are in various stages of

clinical development using a variety of therapeutic approaches.

. The companies currently sponsoring the development of these agents include Genzyme, Otsuka,

Taisho, Atherogenics, Flow Medic, Corautus and deCode Genetics.

. ACTV believes that no product on the market or product candidate in development other than

Rifalazil seeks to target intermittent claudication associated with PAD using an anti-Chlamydial

agent.

o Rifalazil for Carotid Artery Atherosclerosis.

. There are no currently approved drug treatments for the reduction of the progression of carotid

artery atherosclerosis.

. However, ACTV is aware of several companies that are sponsoring clinical trials for possible

label expansions of existing products to address this indication. The companies currently

sponsoring such studies include Kos Pharmaceuticals, AstraZeneca, Takeda Pharmaceuticals and

Pfizer.

. ACTV believes that no product on the market or product candidate in development other than

Rifalazil is designed to be a once-weekly short course therapy to reduce progression of carotid

artery atherosclerosis related to Chlamydia infection.

o M40403 for POI.

. There are no approved therapies directly targeted for the management of POI. ACTV is aware of

two other companies, Aeolus Pharmaceuticals Corporation and Eukarion, Inc., whose business

plan is based on SOD mimetic technology.

. To ACTV's knowledge, neither company is focused on POI. Tranzyme Pharma is developing

TZP-101, currently in a Phase I clinical trial, for the management of gastrointestinal motility

disorders, such as POI. Adolor Corporation, in partnership with GlaxoSmithKline, has submitted a

NDA that is under current review by the FDA for Entereg, a selective opioid antagonist, for the

management of POI due to opioid-induced effects on bowel function.

. In addition, Wyeth Corporation and Progenics Corporation are co-developing methylnaltrexone,

a peripheral opioid antagonist, for the management of POI. Wyeth Corporation and Progenics

Corporation recently completed enrollment in their second pivotal Phase III trial for this product

candidate.

Use of $53mm in IPO proceeds

o to fund clinical trials of Rifalazil;

o to fund clinical trials of M40403; and

o for other research and development activities and for general corporate purposes.

=========================================================

Canadian Solar Inc.

CSIQ, C+, 7

solar module products

Post-IPO shrs:27.3mm

Jiangsu, China

2003

2004

2005

June 05*

June 06*

IPO Mkt

Rev ($mm)

$4

$10

$18

$7

$26

Cap (mm)

Gross Profit %

41%

33%

39%

44%

28%

$382

Operating Income %

16%

19%

28%

31%

20%

@$14

Profit (loss) ($mm)

$0.8

$1.5

$3.8

$1.9

-$4.6

Profit (loss) %

18.5%

15.5%

20.8%

27.1%

-17.7%

Note: June 30, 2006 six months includes $8.2mm loss on financial instruments

$4.4

$7.6

$9.2

$4.4

*for the six months ended June 30

VALUATION RATIOS

IPO Mrkt

Price /

Price /

Price /

Price /

% offered

Cap (mm)

Sales

Earnings

BookValue

TangibleBV

in IPO

Canadian Solar (CSIQ)

$382

9.7

53

3.8

3.8

28%

SCORECARD

Mgt

Market

Market Do-

Proprie-

Total

1-5, 5 is high

Growth

mination

tary

rating

20 is perfect

2

2

2

1

7

Note: based on a shortage of silicon for solar modules, the gross profit margin is not in contrl

Business

. Solar module products that convert sunlight into electricity for a variety of uses. Solar modules

are an array of interconnected solar cells encased in a weatherproof frame

. Sell products to customers located in various markets worldwide, including Germany, Spain,

Canada, China and Japan.

. Incorporated in Canada and conducts all manufacturing operations in China.

Risk for growth

. Current industry wide shortage of high-purity silicon that may constrain CSIQ's revenue growth

and decrease gross margins and profitability"

. CSIQ believes its current silicon raw material supply agreements and toll manufacturing

arrangements will enable CSIQ to secure solar cells sufficient for a major portion of estimated

2006 and a portion of estimated 2007 production output.

Government Subsidies

. CSIQ believes that the near-term growth of the market for on-grid applications depends in large

part on the availability and size of government subsidies and economic incentives.

. Today, the cost of implementing and operating a solar power system substantially exceeds the

cost of purchasing power provided by the electric utility grid in many locations.

Products

Products are sold primarily under CSIQ's own brand name and also produced on an OEM basis

for customers.

Standard solar modules

. Range of standard solar modules built to general specifications for use in a wide range of

residential, commercial and industrial solar power generation systems.

. Currently sells standard solar modules to distributors and system integrators.

Specialty solar modules

. Also designs and produces specialty solar modules and products based on customers'

requirements.

. Specialty solar modules and products consist of customized modules that CSIQ's customers

incorporate into their own products, such as solar-powered bus stop lighting, and complete

specialty products, such as solar-powered car battery chargers.

Services

Also implements solar power development projects, primarily in conjunction with government

organizations to provide solar power generation in rural areas of China.

Competitors

. International competitors include BP Solar International Inc., or BP Solar, Sharp Solar

Corporation, or Sharp Solar, SolarWorld AG, or SolarWorld

. Competitors located in China such as Suntech Power Holdings Co., Ltd. or Suntech Power.

Technology trends

. CSIQ believes many of its competitors are developing and are currently producing products

based on new solar power technologies that may ultimately have costs similar to, or lower than,

CSIQ's projected costs.

. For example, while crystalline technology currently accounts for 94% of the solar power market,

some of competitors are developing or currently producing products based on alternative solar

technologies, such as thin film photovoltaic materials, which they believe will ultimately cost the

same as or less than crystalline silicon technologies, which CSIQ uses.

. Solar modules produced using thin film materials, such as amorphous silicon and cadmium

telluride, require significantly less silicon to produce than crystalline silicon solar modules, such

as CSIQ's products, and are less susceptible to increases in silicon costs.

. CSIQ may also face competition from semiconductor manufacturers, several of which have

already announced plans to start production of solar modules. In addition, the entry barriers are

relatively low in the solar module manufacturing business given the low capital requirements and

relatively less technological complexity involved.

. Due to the scarcity of high-purity silicon, supply chain management and access to financing are

key entry barriers at present. However, if high-purity silicon capacity increases, these barriers may

no longer exist and many new competitors may enter into the industry resulting in rapid industry

fragmentation and loss of CSIQ's market share.

Use of $77.4mm in IPO proceeds from sale of 6.3mm shares

(shareholders intend to sell 1.4mm shares)

o $30.0 million to purchase or prepay for solar cells and silicon raw materials;

o $35.0 million for expansion into solar cell manufacturing, including purchasing

o Remaining amount for general corporate purposes

========================================================

Capella Education

CPLA, C+, 7

online post-secondary education

Post-IPO shrs:15.4mm

Minneapolis, Minnesota

2003

2004

2005

Sept 05*

Sept 06*

IPO Mkt

Rev ($mm)

$82

$118

$149

$107

$129

Cap (mm)

Instructional costs&services

53.7%

50.0%

47.7%

48.6%

47.7%

$285

Operating income ($mm)

$4.1

$9.9

$14.9

$10.6

$10.2

@$18.5

Operating income %

5.0%

8.4%

10.0%

9.9%

7.9%

Profit (loss) ($mm)

$4.4

$18.9

$10.3

$7.3

$7.7

Profit (loss) %

5.4%

16.0%

6.9%

6.8%

6.0%

Enrollment

9,313

12,252

14,613

13,308

16,374

Note: 2004 includes a tax benefit of $8.2mm

*for the nine months ended Sept 30

For the nine months ended Sept 30 notice operating income is down both on an absolute and % basis

VALUATION RATIOS

IPO Mrkt

Price /

Price /

Price /

Price /

% offered

Cap (mm)

Sales

Earnings

BookValue

TangibleBV

in IPO

Capella Education CPLA

$285

1.7

28

3.7

3.7

26%

SCORECARD

Mgt

Market

Market Do-

Proprie-

Total

1-5, 5 is high

Growth

mination

tary

rating

20 is perfect

2

2

2

1

7

Compare & contrast

IPO Mrkt

Price /

Price /

Price /

Price /

Price

Cap (mm)

Sales

Earnings

BookValue

TangibleBV

Nov 7

Apollo Group Inc. (APOL)*

$6,100

2.8

19

13.8

15.1

$35.25

Career Education (CECO)

$2,070

1.1

60

2.2

3.7

$21.86

Capella Education CPLA

$285

1.7

28

3.7

3.7

26%

* (University of Phoenix) quarter ended February 28, 2006 because

November 4, 2006: Apollo has announced that a restatement of its historical financial statements will be