Page 1 of 39

STILL WAITING FOR THE “ALL CLEAR” SIGNAL

Aberdeen Investment Management, LLC A Guide Service for Micro-Cap Technology Investment

July 31, 2012 Jeb B. Terry, Sr. – President

jbtsr@aberdeeninvestment.com

Caution: It’s a risky world we live in. My opinions are based on information believed to be reliable but hey, I could be wrong. When investing, try to use good judgment and don't hesitate to seek

professional assistance. Remember to set limits and have a plan. . . Good Luck!

Page 2 of 39

ALL CLEAR?

In the long run . . . it’s remarkably good

People . . . Employment picking up. We remain in a sweet spot

Productivity . . . Profits are strong and will get even stronger

Capital . . . We are awash in liquidity, under loaned & under invested

Consumers have the capacity to spend and invest

Stocks are cheap

Interest rates and high frequency data signal sustainable recovery

Housing will be a wind at our backs

There is a Mobile Revolution going on

Big government is the biggest risk

Page 3 of 39

“Future returns in equities . . . are as good as they have been in a generation” – Goldman Sachs Mar. 21, 2012

Reversion to the mean is in progress . . .

29%

-58%

313%

87%

-25%

34%57%

272%

369%

88%

-38%-100%

-50%

0%

50%

100%

150%

200%

250%

300%

350%

400%

450%

S&P 500PRICE HISTORY: 1926 TO PRESENT

10 Year % Change 10 year % Change - Linear Regression

70%

Page 4 of 39

Page 5 of 39

PEOPLE, PRODUCTIVITY AND CAPITAL

Employment is rising from trough conditions – best phase of labor cycle to invest.

63,684

136,559

146,483

137,960

60,000

70,000

80,000

90,000

100,000

110,000

120,000

130,000

140,000

150,000

160,000

Th

ou

san

ds

PERSPECTIVES ON U.S. EMPLOYMENT METRICS1959 to Present

Persons Employed (000's)

Linear (Persons Employed (000's))

Source: Bureau of Labor Statistics, Household Survey

142,415

Page 6 of 39

Don’t be misled by headline employment numbers - the trend is up. Rate of new jobs tracking with the median rate since 1980.

876

1,244

381

(3,000)

(2,500)

(2,000)

(1,500)

(1,000)

(500)

-

500

1,000

1,500

2,000

Change in Number of New Jobs Since 1980Quarterly Change in Employed

Qtrly Change in # Employed

Median Qtrly Change in # Employed Since 1980

4 per. Mov. Avg. (Qtrly Change in # Employed)

Page 7 of 39

Initial unemployment claims are dropping to levels of 2004 and the 90’s. Dropping unemployment claims are consistent with an expanding economy and a rising stock market.

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U.S. has best labor force demographics on the planet

Page 9 of 39

Still in a sweet spot of rising workers, plenty of spenders and declining dependents.

2.0

2.3

2.5

2.8

3.0

3.3

3.5

3.8

4.0

4.3

4.5

4.8

5.0

MIL

LIO

NS

OF

PE

OP

LE

NUMBER OF PEOPLE REACHING AGE 49VERSUS AGE 18 AND 25

1954 TO 2018

49 YR OLDS 18 YR OLDS 25 YR OLDS

Source:Cenus Bureau

Page 10 of 39

The most productive and economically engaged people in recorded economic history. We are the best educated, best informed and most investment literate population in history.

There is a growing urgency for the population to earn a better return on investment.

70.1

79.5

98.6101.1

60.0

70.0

80.0

90.0

100.0

110.0

Mil

lio

ns o

f P

eo

ple

GROWTH IN THE INVESTING PUBLICU.S. POPULATION AGE 45 TO 70

Source: US Census and Aberdeen Invesment estimates

Page 11 of 39

PEOPLE, PRODUCTIVITY AND CAPITAL

Profits will compress as a % as more is spent on labor and capacity expansion. Markets won’t peak for another 1 to 2 years from the top.

7.1%

10.0%

8.3%

6.8%

8.6%

7.3%

10.8%

7.4%

12.3%

6.9%6%

7%

8%

9%

10%

11%

12%

13%

14%

% o

f N

om

inal G

DP

Corporate Profits as % of Nominal GDP1972 to Present

(Seasonally Adj. Annual rates per NIPA)

Linear (Corp Profit/Nominal GDP)

12.3%

Source: Bureau of Eco Analysis. National Income and Product Accounts.

Profits LEAD GDP and stock market value.

Page 12 of 39

“Digits vs. Widgets”

Why profits are trending higher . . . Apple vs. Exxon

APPLE EXXON($millions)

Market Cap 548,535$ 408,931$

2012 Revenue 156,280$ 468,580$

2012 Revenue Growth 44% -4%

EBITDA Margin 38% 12%

Fixed Asset Turn 14.90 2.18

Cash, Net of LT Debt 117,221$ 9,916$

2012 EPS Growth Rate 60% -10%

2012 P/E Multiple 13.22 11.55

Page 13 of 39

Public company earnings have been rising strongly from productivity gains, the shift in mix to technology and globalization. Earnings are up 76% since the 2000 high while the SPX is down 8%.

996.3

681.6

1,604.9

694.9

1,467.9

1,357.6

1

201

401

601

801

1,001

1,201

1,401

1,601

1,801

2,001

19

71

= 1

00

S&P 500 Earnings vs PriceRelative Change Since 1971

LTM S&P 500 EPS 1971=100 S&P 500 Price 1971=100

Source: Standard and Poors

1,731.2

Page 14 of 39

PEOPLE, PRODUCTIVITY AND CAPITAL

Lots of Capital, Too Little Confidence

Awash in liquidity. Over $200 billion went into cash in 2 weeks following the July 25, 2011 speech by Obama. This compares to $160 billion following the Lehman bankruptcy in Sept 2008. That flight to cash contributed to the present sluggish economy.

$208 $390

$780

$1,156 $1,209

$1,632

$-

$500

$1,000

$1,500

$2,000

$2,500

$B

illi

on

s

STILL HOARDING CASHM1 SINCE 1970

Jul-12

Source: Federal Reserve, Not seasonally adjusted

9-11-2001 Terrorist Attack

Sept/Oct 2008 Financial Melt Down

$2,245

2011 Debt Ceiling /Downgrade/Euro

Crisis

Page 15 of 39

Banks are starting to make loans.

$106 $282

$605

$1,087

$871

$1,601

$-

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$B

illio

ns

LOAN BALANCES GROWING FASTEST SINCE 2008 BANK C&I LOANS SINCE 1970

Jun-12

Source: Federal Reserve, seasonally adjusted

Peak Dec 2000

Peak Oct 2008

$1,435

Page 16 of 39

But velocity remains at recession low levels.

Over $500 billion in unutilized lending capacity. Plenty of capacity to fund growth in the economy.

0.30

0.45

0.43

0.55

0.67

0.20

0.30

0.40

0.50

0.60

0.70

0.80

Ve

loc

ity -

Lo

an

s/M

2BANK C&I and REAL ESTATE LOANS vs. M2

VELOCITY SINCE 1970

Source: Federal Reserve, seasonally adjusted

0.50

Real Estate Loans take off

Page 17 of 39

The hoarding of cash has temporarily stunted profit growth. We are at a turning point. Look for profit acceleration once M2 growth starts to slow and people convert cash into goods.

-6.0%

-2.0%

2.0%

6.0%

10.0%

14.0%

18.0%-30%

-22%

-14%

-6%

2%

10%

18%

26%

34%

42%

50%

NIP

A C

orp

. P

rofi

t Y

-O-Y

% C

ha

ng

eY

-O-Y

% C

han

ge M

2 -

Inverte

d

CHANGE IN M2 (Inverted scale) vs CHANGE IN CORPORATE PROFITS

(All Corporate Profits per NIPA)

1971 to Present

Source: Federal Reserve, BEA - National Income and Products Accounts

When M2 growth slows, profit growth picks up.

Page 18 of 39

A perfect contrarian set up. Retail money has fled equities in unprecedented amounts since 2008.

Over $133 Billion have been taken out of Equity mutual funds since May 2011. Hang on to your hats when this reverses. Equity inflows have a gearing impact on market value of as high as 10X or more.

$309

-$28

-$238

-$24

-$128

-$24-$64.6 -$49.8

$140.3

$375.0

$244.8

$119.1$139.1

-$300

-$200

-$100

$0

$100

$200

$300

$400

$500

$ B

illi

on

s

Equity vs. Bond Mutual Fund Net New Cash Flow1990 to May 2012

Equity Bond

Unprecedented move into retail

bond funds

Unprecedented move into retail

equity funds

Unprecedented move out of retail

equity funds

Source: ICI, Sifma.org

Page 19 of 39

CONSUMERS CAN SPEND AND INVEST

They have nearly 11 months of personal consumption expenditure sitting in cash!

11.0

10.48

8.4

9.3 9.22

10.39

8.0

8.4

8.7

9.1

9.4

9.8

10.1

10.5

10.8

11.2

11.5

Mo

nth

s -

M2

Rebuilding Liquidity: Months of PCE Held as Cash, Savings Dep & Retail Money Market Funds

1980 to June 2012

M2 includes a broader set of financial assets held principally by households. M2 consists of M1 plus: (1) savings deposits (which include money market deposit accounts, or MMDAs); (2) small-denomination time deposits (time deposits in amounts of less than $100,000); and (3) balances in retail money market mutual funds (MMMFs).

10.77

Page 20 of 39

They have the most income versus debt service in 20 years.

11.90%

10.64%

12.5%

13.95%

10.00%

10.50%

11.00%

11.50%

12.00%

12.50%

13.00%

13.50%

14.00%

14.50%

Rebuilding Liquidity: Debt Service as % of DPI1990 to Present

Source: Bureau of Eco. Analysis, Federal Reserve

Consumer debt service as a % of Disposable Personal Income is in the best shape since 1994.

10.98%

Page 21 of 39

Few would guess retirement funds and retail cash assets are at record high levels and outgrowing GDP!

SPX averaged 66.3% of retirement assets and money market accounts since 1995. It is 57.3% today. The SPX would be 15.7% higher if it were to return to its average mix of retirement assets.

$3,127

$20,167

$16,704

$4,319.3

$-

$5,000

$10,000

$15,000

$20,000

$25,000

$ B

illio

ns

Retirement Accounts & Cash vs. Nominal GDP1985 to Present

Retirement & M1 & Retail Money Market Funds Nominal GDP

$21,836

$15,596

Page 22 of 39

STOCKS ARE CHEAP

The P/E ratio is not at a level characteristic of a top.

5.906.97 6.68

18.31

11.51

21.61

14.47

29.44

15.29

16.91

0

5

10

15

20

25

30

35

LTM P/E Ratio S&P 500 1926 to Present

Median P/E Ratio 1926 Median P/E Ratio Since 1982

4 Year Moving Average

14.02

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SPX would be $1,625, up 17%, if it were to trade at the June 2007 P/E. SPX would be 2010, up 45%, if it were to trade at the Dec 2003 P/E – when earnings were at a similar point of recovering above the prior high.

$14.88

$30.66

$-

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00

S&P 500 Quarterly Operating EPS1988 to Present and Projected to Dec. 2013

Qtrly Operating Earnings

Projected Qtrly Operating Earnings

Linear Regression of Earnings

P/E Ratio of 20.3X at December 2003

Current LTM P/E Ratio of 14.0X

P/E Ratio of 16.4X at June 2007

Page 24 of 39

Treasury Bonds are incredibly overvalued. Paying an effective P/E of 64X for 10 year Treasuries borders on insanity.

The peak P/E for stocks was only 34X in 2000.

19.99

34.1932.17

12.3513.26

30.03

64.31

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

55.0

60.0

65.0

70.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

55.0

60.0

65.0

70.0

10

Yr T

rea

s. P

/E R

atio

P/E

Ra

tio

S&P 500 FTM Operating Earnings P/E Ratio vs. The "P/E Ratio" of the 10 Year Treasury

1988 to Present

S&P 500 FTM Oper. Earnings P/E Ratio 10 Year Treasury P/E

Page 25 of 39

The S&P 500 is incredibly undervalued relative to interest rates and earnings growth.

A flipside to the overvalued tops going into the 1987 crash and the 2000 tech crash.

72%

-43.9% -59.1%-80%

-40%

0%

40%

80%

120%

160%

200%

240%

280%

(1,500)

(500)

500

1,500

2,500

3,500

4,500

5,500

6,500

7,500

% O

ver / U

nd

er V

alu

ed

S&

P 5

00

S&P 500 Actual Price vs. Cap Rate Value

% Over Valued % Under Valued

S&P 500 Actual Cap Rate Fair Value

-78.2%

6,357

1987 market crash

-78.2%

2000 tech crash

-78.2%-78.2%

1,386

79%

Page 26 of 39

INTEREST RATES AND HIGH FREQUENCY DATA SIGNAL CONTINUING RECOVERY

The yield curve is STEEP . . . It is 28% steeper than average.

3.85 3.73

-7.0

0.0

7.0

14.0

21.0

28.0

35.0

42.0

(10.0)

(5.0)

-

5.0

10.0

15.0

20.0

25.0

Yie

ld C

urv

e H

isto

gra

m%

In

tere

st

Ra

teThe Yield Curve

10 YEAR U.S. TREAS NOTE vs. FED FUNDS RATE1980 to Present

Yield Curve Histogram 10 Yr Treas rate FED FUNDS RATE

Source: Federal Reserve

2.09

The economy has grown and equity markets have had prolonged bull phases every time the curve has been this steep.

Page 27 of 39

The Institute of Supply Managers surveys continue to signal businesses are growing. (scores over 50 signal expansion)

30.00

35.00

40.00

45.00

50.00

55.00

60.00

65.00

70.00

ISM Business Activity Index:Manufacturing v. Non-Manufacturing

1997-Present

Monthly Mfg Activity Index

Monthly Non-Mfg Business Activity Index

Page 28 of 39

HOUSING IS A WIND AT OUR BACKS

Page 29 of 39

Job growth leads growth in permits. Recent job growth signals a potential for a sharp improvement in housing permits.

Permits could more than double if they return to the historical relation to job growth.

(10,000)

(8,000)

(6,000)

(4,000)

(2,000)

-

2,000

4,000

6,000

8,000

0

50

100

150

200

250

Pers

on

s -

Th

ou

san

dsP

erm

its -

Th

ou

san

ds

Monthly Housing Permits vs New Jobs1959 to Present

12 per. Mov. Avg. (Total Housing Permits)

12 per. Mov. Avg. (YOY Change in # Employed)

Page 30 of 39

Record low mortgage rates and rising personal income = improving housing affordability.

154.8

68.9

133.2

106.1

174.0

205.9

60.0

80.0

100.0

120.0

140.0

160.0

180.0

200.0

220.0

US Housing Affordability Index

Source: Natl. Assoc. of Realtors www.realtor.org

Best Time On Record to Buy a House!

Page 31 of 39

HANG ON TO YOUR HATS – THE MOBILE REVOLUTION HAS MUCH MORE TO GO

Déjà vu all over again . . . similar growth trajectory as late 90’s. We are in year 3 of a multi-year boom.

1,419.8

4,188.4

100

1,448.3

0

1000

2000

3000

4000

5000

6000

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

Global Data Traffic Growth: Fixed Internet 1996-2001 vs. Mobile Internet 2008-2014

Global Fixed Line Internet Traffic

Global Mobile Internet Traffic

Source: Cisco VNI Mobile 2012

Page 32 of 39

Page 33 of 39

SO . . . WHAT ABOUT THE ELECTION? It is the Economy Stupid!

Page 34 of 39

BY THE TIME THE HERD JUMPS IN – YOU ARE LATE

Patient buying of growth stocks is needed to invigorate investor returns. Aberdeen focuses on young micro-cap tech stocks and is engaged in the mobile revolution.

Page 35 of 39

Investment Opportunities in Small and Micro-Cap Technology Businesses

Aberdeen Investment Management, LLC A Guide Service for Micro-Cap Technology Investment

Jeb B. Terry, Sr. – President jbtsr@aberdeeninvestment.com

THIS SUMMARY IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO PROVIDE ANY SERVICES DESCRIBED HEREIN. SUCH AN OFFER OR SOLICITATION WILL ONLY BE MADE VIA MEANS OF ADVISORY SERVICES MATERIALS TO INVESTORS WHO MEET THE SUITABILITY STANDARDS DESCRIBED THEREIN.

Page 36 of 39

Keep it Simple: Invest in a select group of small and micro-cap publicly traded technology businesses that are in an early phase of their growth.

Harness the migration from analog to digital

The Dominant Themes: Online commerce & media, mobile, cloud computing, SaaS

Portfolio company profile: o Wt. Average revenue: $104.5 million growing 16% in 2012 o Wt. Average EBITDA: $9 million growing 42% o Wt. Average market cap: $221.6 million o Wt. Average EV: $169.5 million

Investment Cycle: o 8 of our 21 investments since 2003 have been bought out, 3 have

been exited at a loss, 10 remain active o Average investment duration ~30 months

Page 37 of 39

Climbing the “S”. . . 15 year old boys instead of embryos

The "S" Curve

Technology Adoption Cycle

Time

Cu

sto

mers

/ R

even

ue / M

ark

et

Siz

e

INFANCY

ADOLESCENCE

MATURITY

CHASM

Early Adopters

"Buy" the

product

LaterAdopters are

"Sold" the product

TARGET INVESTMENTS

Page 38 of 39

The Aberdeen Investment Program

Long term investment.

Targeted 3 to 5 year returns are 2X to 4X the original investment.

Concentrated investments to maximize returns. 10 to 15 positions.

Low turnover.

Compensated principally on performance. An asset based fee is also charged.

No lock ups. Investors hold investments in separate accounts. The investor can add or withdraw capital with appropriate notice.

The investor provides Aberdeen with discretion to execute transactions on the clients’ behalf.

Page 39 of 39

Management

JEB B. TERRY, Sr.: President, jbtsr@aberdeeninvestment.com,

Mr. Terry draws upon investment experience in the areas of venture capital, leveraged buy outs, foreign emerging markets and public stock markets.

Mr. Terry has an MBA from Columbia Graduate School of Business and a BBA from Southern Methodist University.

Russell L. Jennings.: VP, CPA, russell@aberdeeninvestment.com

Mr. Jennings has over 15 years of corporate financial experience with technology, investment advisory and start-up companies. Mr. Jennings graduated from Texas A&M University with a BBA in Accounting.

Aberdeen Investment Management, LLC. 6440 N. Central Expressway, Suite 618, Dallas, TX 75206

214-347-9115