In March 2003, the Fog Cutter Capital Group Inc. structured a financing package intended to help stabilize Strouds Acquisition Corporation, a distressed specialty linen retailer. The financing package allowed Strouds critical time to examine its business model and evaluate further strategic options. The Company’s $3.0 million financing package for Strouds included a $2.0 million loan participation in Fleet Retail Finance Inc.’s senior secured credit facility; a $900,000 subordinated secured loan; 100,000 shares of preferred stock; and common stock warrants for up to 49.5% of Strouds’ voting stock.

On May 20, 2003, Strouds filed for bankruptcy protection under Chapter 11 of the Bankruptcy Code and proceeded to liquidate its assets. As of September 30, 2003, the Company had been repaid in full on its $2.0 million participation in the Fleet Retail credit facility and all of its $900,000 subordinated secured loan, plus interest.

Prior to its liquidation, Strouds was a specialty retailer of bed, bath, tabletop and other home textile products, offering an extensive selection of high quality, brand name linens for the home. In 1979, Bill and Joyce Stroud opened their first store in Pasadena, California. The company had grown into a chain of 50 full-line stores and outlets primarily in California, with locations in Nevada, Minnesota and Arizona. Strouds employed over 1,000 full-time and part-time employees and operated in two primary lines of business; upper-scale retail stores and discounted outlet centers. Catalog and internet sales were also offered by the retailer. Strouds operated a 180,000 square foot distribution center and headquarters in the City of Industry, California.